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AUSTIN, TX -- (Marketwire) -- 04/26/12 -- SolarWinds® (NYSE: SWI), a leading provider of powerful and affordable IT management software, today reported results for its first quarter ended March 31, 2012.

• Record total revenue for the first quarter of $59.7 million, representing 39% year-over-year growth.
• GAAP operating income of $23.7 million and non-GAAP operating income of $31.6 million, or a non-GAAP operating margin for the first quarter of 53%.
• GAAP diluted earnings per share of $0.23 and non-GAAP diluted earnings per share of $0.30.
• First quarter free cash flow of $30.9 million, representing 41% year-over-year growth.

Financial Results

SolarWinds reported record total revenue for the first quarter of 2012 of $59.7 million, a 39% increase over total revenue for the first quarter of 2011. License revenue was a record $27.5 million for the first quarter of 2012 representing a 35% increase over license revenue for the first quarter of 2011. Maintenance revenue was a record $32.2 million for the first quarter of 2012, representing a 43% increase over maintenance revenue for the first quarter of 2011.

On a GAAP basis, diluted earnings per share were $0.23 for the first quarter of 2012 compared to $0.16 for the first quarter of 2011. Non-GAAP diluted earnings per share were $0.30 for the first quarter of 2012 compared to $0.21 for the first quarter of 2011.

Net cash provided by operating activities was $28.3 million for the first quarter of 2012 compared to $18.9 million for the first quarter of 2011, representing a year-over-year increase of 50%. Free cash flow was $30.9 million for the first quarter of 2012 compared to $21.8 million for the first quarter of 2011, representing a year-over-year increase of 41%. Cash, cash equivalents, and investments at the end of the first quarter of 2012 were $171.2 million, an increase of $18.8 million from the end of the fourth quarter of 2011.

The financial results included in this press release are preliminary and pending final review by the company and its external auditors. Financial results will not be final until SolarWinds files its quarterly report on Form 10-Q for the period. Information about SolarWinds' use of these non-GAAP financial measures is provided below under "Non-GAAP Financial Measures."

Recent Business Highlights

"We are off to a solid start for 2012 due to the tremendous efforts of the SolarWinds team to deliver strong results for the first quarter across each of our geographies and across our product portfolio. We feel that our quarterly performance reflects the power of our disruptive business model and the success of our efforts to introduce more and more IT pros to our brand of IT management solutions," said Kevin Thompson, SolarWinds' President and Chief Executive Officer.

"Looking ahead, we will continue to focus our efforts on delivering the unexpected simplicity of products that just work for IT professionals -- products that easily and affordably solve the real-world challenges of today's IT environments, that do not sacrifice power for ease of use, and that rapidly increase in value over time through frequent, user-driven feature updates. We believe that this commitment will continue to set us apart from our competition and allow us to continue to grow in the IT management market," added Thompson.

SolarWinds' business highlights during the first quarter of 2012 include:

• SolarWinds expanded its systems management portfolio with a new release of DameWare™ Tools and the release of Patch Manager, the patch management product acquired from EminentWare. These join the latest versions of SolarWinds Server & Application Monitor (formerly APM) and SolarWinds Synthetic End User Monitor to form a product portfolio that addresses the real-world needs of sysadmins.
• The company continued to increase the value of its customers' investment in SolarWinds products through new releases of SolarWinds User Device Tracker and SolarWinds Storage Manager, Powered by Profiler™.
• SolarWinds launched a significant update to thwack®, its online community of more than 100,000 IT professionals. This re-launch positions thwack to be not only a trusted, go-to resource for SolarWinds customers, but also a valuable source of information for the broader IT professional community through improved user experience and engagement, expanded discussion topics and forums, and broader content offerings.
• As part of the ongoing effort to drive greater awareness for its broad set of IT management capabilities, SolarWinds released five new free tools including Event Log Consolidator, a free tool for monitoring, consolidating, and addressing events logs on Windows® systems, VM Monitor for Microsoft® Hyper-V®, a free tool for monitoring the health of Hyper-V® environments, and three new free tools for use with Microsoft Active Directory® designed to help manage the routine tasks of removing inactive users (Inactive Computer Removal Tool) and computers (Inactive Computer Removal Tool), and adding users in bulk (User Import Tool).
• SolarWinds products garnered additional accolades and awards from IT pros and industry influencers for their ease of use, power, and affordability. Recognized products included SolarWinds Network Performance Monitor, SolarWinds User Device Tracker, DameWare NT Utilities, SolarWinds Storage Manager, SolarWinds Virtualization Manager, and SolarWinds Log & Event Manager.

"With strong top- and bottom-line results for the first quarter, SolarWinds is off to a solid start for the year," added Mike Berry, SolarWinds' Chief Financial Officer. "Driven largely by our broad-based outperformance in the first quarter coupled with our continued confidence in the strength of our business, we are increasing our revenue and earnings outlook for the full year. Overall, we continue to be very excited about our opportunities to generate solid revenue growth, profitability, and cash flow."

Financial Outlook

As of April 26, 2012, SolarWinds is providing its financial outlook for its second quarter and full year of 2012. The financial information below represents forward-looking non-GAAP financial information, including an estimate of non-GAAP operating income as a percentage of revenue, and non-GAAP diluted earnings per share, for the second quarter of 2012 and for the full year 2012. These non-GAAP financial measures exclude, among other items mentioned below, stock-based compensation expense and related employer-paid payroll taxes. SolarWinds cannot reasonably estimate the expected stock-based compensation expense and related employer-paid payroll taxes for these future periods as the amounts depend upon such factors as the future price of SolarWinds' stock for purposes of computation. In addition, costs related to non-recurring items and acquisitions are not something that SolarWinds can estimate because they are a function of what non-recurring items and acquisitions, if any, occur and the kind of costs incurred in connection with any such non-recurring items or acquisitions.

Financial Outlook for the Second Quarter of 2012

SolarWinds management currently expects to achieve the following results for the second quarter of 2012:

• Total revenue in the range of $59.0-$60.2 million, or 29% to 31% growth over the second quarter of 2011.
• Non-GAAP operating income representing approximately 50% of revenue.
• Non-GAAP diluted earnings per share of $0.26-$0.27.
• Weighted average shares outstanding of approximately 76.5 million.

Financial Outlook for Full Year 2012

SolarWinds management is increasing its annual outlook and currently expects to achieve the following results for the full year 2012:

• Total revenue in the range of $250.0-$260.0 million, or 26% to 31% year-over-year growth.
• Non-GAAP operating income representing 50%-51% of revenue.
• Non-GAAP diluted earnings per share of $1.14-$1.19.
• Weighted average shares outstanding of approximately 77.2 million.

Conference Call and Webcast

In conjunction with this announcement, SolarWinds will host a conference call today to discuss its financial results and other business at 8:00am CT (9:00am ET/6:00am PT). A live webcast of the event, including any supplemental information, will be available on the SolarWinds Investor Relations website at http://ir.solarwinds.com. A live dial-in will be available domestically at 877-397-0272 and internationally at +1-719-325-4915. To access the live call, please dial in 5-10 minutes before the scheduled start time. A replay of the webcast will be available on a temporary basis shortly after the event on the SolarWinds Investor Relations website.

Forward-Looking Statements

This press release contains "forward-looking" statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including SolarWinds' financial outlook, its plan to focus efforts on delivering the unexpected simplicity of products that just work for IT professionals, and its belief that this plan will continue to set it apart from competition and allow it to continue to grow in the IT management market. These forward-looking statements are based on management's beliefs and assumptions and on information currently available to management. Forward-looking statements include all statements that are not historical facts and may be identified by terms such as "believe," "continue," or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the following: (a) the inability to generate significant volumes of sales leads from Internet search engines, marketing campaigns and traffic to our websites; (b) the possibility that general economic conditions or uncertainty cause information technology spending to be reduced or purchasing decisions to be delayed; (c) the presence or absence of occasional large customer orders, including in particular those placed by the U.S. federal government; (d) the inability to increase sales to existing customers and to attract new customers; (e) SolarWinds' failure to integrate acquired businesses and any future acquisitions successfully; (f) the timing and success of new product introductions by SolarWinds or its competitors; (g) potential foreign exchange gains and losses related to expenses and sales denominated in currencies other than the functional currency of an associated entity; and (h) such other risks and uncertainties described more fully in documents filed with or furnished to the Securities and Exchange Commission, including the Form 10-Q that SolarWinds anticipates filing on or before May 10, 2012. All information provided in this release is as of the date hereof and SolarWinds undertakes no duty to update this information except as required by law.

Non-GAAP Financial Measures

In addition to disclosing financial measures prepared in accordance with GAAP, this press release and the accompanying tables contain certain non-GAAP financial measures. The tables below set forth a reconciliation of each of these non-GAAP measures to a GAAP financial measure that we consider to be most comparable. SolarWinds believes that each of these non-GAAP financial measures provides meaningful supplemental information regarding its performance by excluding certain items that may not be indicative of its core business operations. SolarWinds' management and Board of Directors use certain of these non-GAAP measures to assess operational performance and to determine employee incentive compensation. Accordingly, these measures may provide helpful insight to investors on the motivation and decision-making of management in operating the business. SolarWinds considers free cash flow also to be a liquidity measure that provides important information regarding the cash generated by the business after the purchase of property and equipment that can then be used for, among other things, strategic acquisitions and investments in the business, stock repurchases and funding ongoing operations.

SolarWinds also believes that these non-GAAP financial measures are used by investors and security analysts to (a) compare and evaluate its performance from period to period and (b) compare its performance to those of its competitors. These non-GAAP measures exclude certain items that can vary substantially from company to company depending upon their financing and accounting methods, the book value of their assets, their capital structures and the method by which their assets were acquired.

There are limitations associated with the use of these non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with GAAP, do not reflect a comprehensive system of accounting and may not be completely comparable to similarly-titled measures of other companies due to potential differences in the exact method of calculation between companies. Certain items that are excluded from these non-GAAP financial measures can have a material impact on operating and net income. In addition, free cash flow does not represent the total increase or decrease in the cash balance for the period.

As a result, these non-GAAP financial measures have limitations and should not be considered in isolation from, or as a substitute for the most comparable GAAP measures. SolarWinds' management and Board of Directors compensate for these limitations by using these non-GAAP financial measures as supplements to GAAP financial measures and by reviewing the reconciliations of the non-GAAP financial measures to their most comparable GAAP financial measure. Investors are encouraged to review the reconciliations of these non-GAAP financial measures to their most comparable GAAP financial measures that are set forth in the tables below.

About SolarWinds

SolarWinds (NYSE: SWI) provides powerful and affordable IT management software to customers worldwide -- from Fortune 500 enterprises to small businesses. We work to put our users first and remove the obstacles that have become "status quo" in traditional enterprise software. SolarWinds products are downloadable, easy to use and maintain, and provide the power, scale, and flexibility needed to address users' management priorities. Our online user community, thwack, is a gathering-place where tens of thousands of IT pros solve problems, share technology, and participate in product development for all of SolarWinds' products. Learn more today at http://www.solarwinds.com.

SolarWinds, the SolarWinds logo and thwack marks are exclusive trademarks of SolarWinds, are registered with the U.S. patent and trademark office, and may be registered or pending registration in other countries. All other SolarWinds trademarks, service marks, and logos, including without limitation, DameWare and Storage Manager, Powered by Profiler, may be common law marks or registered or pending registration in the United States or in other countries. All other trademarks or registered trademarks mentioned herein are used for identification purposes only and may be trademarks or registered trademarks of their respective companies.

Copyright © 2012 SolarWinds Worldwide, LLC. All rights reserved.

                              SolarWinds, Inc.
                   Condensed Consolidated Balance Sheets
           (In thousands, except share and per share information)
                                (Unaudited)


                                              March 31,       December 31,
                                                 2012             2011
                                           ---------------  ---------------
Assets
Current assets:
  Cash and cash equivalents                $       139,336  $       122,707
  Short-term investments                            31,849           29,688
  Accounts receivable, net of allowances
   of $233 and $192 as of March 31, 2012
   and December 31, 2011, respectively              27,848           26,965
  Income tax receivable                              1,170              110
  Deferred taxes                                       753              668
  Prepaid and other current assets                   2,722            2,770
                                           ---------------  ---------------
    Total current assets                           203,678          182,908
Property and equipment, net                          7,463            7,341
Deferred taxes                                       3,449            3,334
Goodwill                                           118,285          110,746
Intangible assets and other, net                    60,277           58,079
                                           ---------------  ---------------
    Total assets                           $       393,152  $       362,408
                                           ===============  ===============

Liabilities and stockholders' equity
Current liabilities:
  Accounts payable                         $         2,580  $         2,213
  Accrued liabilities                                8,369            9,442
  Accrued earnout                                      960            3,513
  Income taxes payable                                 836              779
  Current portion of deferred revenue               79,055           73,774
                                           ---------------  ---------------
    Total current liabilities                       91,800           89,721
Long-term liabilities:
  Deferred revenue, net of current portion           3,931            3,373
  Non-current deferred taxes                             -              289
  Other long-term liabilities                        5,046            4,078
                                           ---------------  ---------------
    Total liabilities                              100,777           97,461
Commitments and contingencies
Stockholders' equity:
  Common stock, $0.001 par value:
   123,000,000 shares authorized and
   73,886,692 and 73,367,367 shares issued
   and outstanding as of March 31, 2012
   and December 31, 2011, respectively                  74               73
  Additional paid-in capital                       203,475          194,379
  Accumulated other comprehensive loss              (1,570)          (2,769)
  Accumulated earnings                              90,396           73,264
                                           ---------------  ---------------
    Total stockholders' equity                     292,375          264,947
                                           ---------------  ---------------
    Total liabilities and stockholders'
     equity                                $       393,152  $       362,408
                                           ===============  ===============

                              SolarWinds, Inc.
                Condensed Consolidated Statements of Income
                (In thousands, except per share information)
                                (Unaudited)


                                                  Three Months Ended
                                                       March 31,
                                           --------------------------------
                                                 2012             2011
                                           ---------------  ---------------

Revenue:
  License                                  $        27,457  $        20,380
  Maintenance and other                             32,214           22,598
                                           ---------------  ---------------
    Total revenue                                   59,671           42,978
  Cost of license revenue                            1,880              765
  Cost of maintenance and other revenue              2,393            1,721
                                           ---------------  ---------------
Gross profit                                        55,398           40,492
Operating expenses:
  Sales and marketing                               16,560           11,727
  Research and development                           6,671            5,038
  General and administrative                         8,449            6,670
                                           ---------------  ---------------
    Total operating expenses                        31,680           23,435
                                           ---------------  ---------------
Operating income                                    23,718           17,057
Other income (expense):
  Interest income                                       88               55
  Other expense, net                                   (16)            (306)
                                           ---------------  ---------------
    Total other income (expense)                        72             (251)
                                           ---------------  ---------------
Income before income taxes                          23,790           16,806
  Income tax expense                                 6,659            5,096
                                           ---------------  ---------------
Net income                                 $        17,131  $        11,710
                                           ===============  ===============
Net income per share:
  Basic earnings per share                 $          0.23  $          0.16
                                           ===============  ===============
  Diluted earnings per share               $          0.23  $          0.16
                                           ===============  ===============
Weighted shares used to compute net income
 per share:
  Shares used in computation of basic
   earnings per share                               73,743           72,368
                                           ===============  ===============
  Shares used in computation of diluted
   earnings per share                               75,440           74,003
                                           ===============  ===============

                              SolarWinds, Inc.
           Reconciliation of GAAP to Non-GAAP Financial Measures
          (In thousands, except per share amounts and percentages)
                                (Unaudited)

                                                      Three Months Ended
                                                           March 31,
                                                   ------------------------
                                                       2012         2011
                                                   -----------  -----------

Revenue                                            $    59,671  $    42,978

GAAP cost of revenue                               $     4,273  $     2,486
  Amortization of intangible assets (1)                 (1,682)        (701)
  Stock-based compensation expense and related
   employer-paid payroll taxes (2)                         (92)         (53)
                                                   -----------  -----------
Non-GAAP cost of revenue                           $     2,499  $     1,732
                                                   ===========  ===========

GAAP gross profit                                  $    55,398  $    40,492
  Amortization of intangible assets (1)                  1,682          701
  Stock-based compensation expense and related
   employer-paid payroll taxes (2)                          92           53
                                                   -----------  -----------
Non-GAAP gross profit                              $    57,172  $    41,246
                                                   ===========  ===========

GAAP sales and marketing expense                   $    16,560  $    11,727
  Stock-based compensation expense and related
   employer-paid payroll taxes (2)                      (1,393)        (909)
                                                   -----------  -----------
Non-GAAP sales and marketing expense               $    15,167  $    10,818
                                                   ===========  ===========

GAAP research and development expense              $     6,671  $     5,038
  Stock-based compensation expense and related
   employer-paid payroll taxes (2)                        (801)        (470)
                                                   -----------  -----------
Non-GAAP research and development expense          $     5,870  $     4,568
                                                   ===========  ===========

GAAP general and administrative expense            $     8,449  $     6,670
  Amortization of intangible assets (1)                 (1,825)        (471)
  Stock-based compensation expense and related
   employer-paid payroll taxes (2)                      (1,848)      (1,428)
  Acquisition related adjustments (3)                     (222)      (1,004)
                                                   -----------  -----------
Non-GAAP general and administrative expense        $     4,554  $     3,767
                                                   ===========  ===========

GAAP operating expense                             $    31,680  $    23,435
  Amortization of intangible assets (1)                 (1,825)        (471)
  Stock-based compensation expense and related
   employer-paid payroll taxes (2)                      (4,042)      (2,807)
  Acquisition related adjustments (3)                     (222)      (1,004)
                                                   -----------  -----------
Non-GAAP operating expense                         $    25,591  $    19,153
                                                   ===========  ===========

GAAP operating income                              $    23,718  $    17,057
  Amortization of intangible assets (1)                  3,507        1,172
  Stock-based compensation expense and related
   employer-paid payroll taxes (2)                       4,134        2,860
  Acquisition related adjustments (3)                      222        1,004
                                                   -----------  -----------
Non-GAAP operating income                          $    31,581  $    22,093
                                                   ===========  ===========

GAAP other income (expense), net                   $        72  $      (251)
  Acquisition related adjustments (3)                        9            -
                                                   -----------  -----------
Non-GAAP other income (expense), net               $        81  $      (251)
                                                   ===========  ===========

GAAP income tax expense                            $     6,659  $     5,096
  Income tax effect on non-GAAP exclusions (4)           2,191        1,047
                                                   -----------  -----------
Non-GAAP income tax expense                        $     8,850  $     6,143
                                                   ===========  ===========

GAAP net income                                    $    17,131  $    11,710
  Amortization of intangible assets (1)                  3,507        1,172
  Stock-based compensation expense and related
   employer-paid payroll taxes (2)                       4,134        2,860
  Acquisition related adjustments (3)                      231        1,004
  Tax benefits associated with above adjustments
   (4)                                                  (2,191)      (1,047)
                                                   -----------  -----------
Non-GAAP net income                                $    22,812  $    15,699
                                                   ===========  ===========

Non-GAAP diluted earnings per share (5)            $      0.30  $      0.21
                                                   ===========  ===========
Weighted average shares used in computing diluted
 earnings per share                                     75,440       74,003
                                                   ===========  ===========

Percentage of Revenue:

GAAP gross profit                                         92.8%        94.2%
  Non-GAAP adjustments (1)(2)                              3.0%         1.8%
                                                   -----------  -----------
Non-GAAP gross profit                                     95.8%        96.0%
                                                   ===========  ===========

GAAP operating margin                                     39.7%        39.7%
  Non-GAAP adjustments (1)(2)(3)                          13.2%        11.7%
                                                   -----------  -----------
Non-GAAP operating margin                                 52.9%        51.4%
                                                   ===========  ===========

GAAP net income                                           28.7%        27.2%
  Non-GAAP adjustments (1)(2)(3)(4)                        9.5%         9.3%
                                                   -----------  -----------
Non-GAAP net income                                       38.2%        36.5%
                                                   ===========  ===========

(1) Amortization of Intangible Assets. We provide non-GAAP information which
excludes expenses for the amortization of intangible assets which primarily
relate to purchased intangible assets associated with our acquisitions.
Because of varying fair value amounts of intangible assets, subjective
impairment assumptions and the variety of useful lives, which affect the
recognition of amortization expense, we believe that the exclusion of
amortization expense allows for more accurate comparisons of our operating
results to our peer companies. The amortization of purchased intangible
assets associated with our acquisitions results in our recording expenses in
our GAAP financial statements that were already expensed by the acquired
company before the acquisition and for which we have not expended cash.
Accordingly, we analyze the performance of our operations in each period
without regard to such expenses.

(2) Stock-Based Compensation Expense and Related Employer-Paid Payroll
Taxes. We provide non-GAAP information which excludes expenses for stock-
based compensation and related employer-paid payroll taxes. We believe the
exclusion of these items allows for financial results that are more
indicative of our continuing operations. We believe that the exclusion of
stock-based compensation expense provides for a better comparison of our
operating results to prior periods and to our peer companies as the
calculations of stock-based compensation vary from period to period and
company to company due to different valuation methodologies, subjective
assumptions and the variety of award types. Employer-paid payroll taxes on
stock- based compensation is dependent on our stock price and the timing of
the taxable events related to the equity awards, over which our management
has little control, and does not correlate to the core operation of our
business. Because of these unique characteristics of stock-based
compensation and the related employer-paid payroll taxes, management
excludes these expenses when analyzing the organization's business
performance.

(3) Acquisition Related Adjustments. We exclude certain expense items
resulting from acquisitions including the following, when applicable: (i)
amortization of purchased intangible assets associated with our acquisitions
(see Note 1 for further discussion); (ii) legal, accounting and advisory
fees to the extent associated with acquisitions; (iii) changes in fair value
of contingent consideration; (iv) costs related to integrating the acquired
businesses; and (v) restructuring costs, including adjustments related to
changes in estimates, related to acquisitions. We consider these
adjustments, to some extent, to be unpredictable and dependent on a
significant number of factors that are outside of our control. Furthermore,
acquisitions result in non-continuing operating expenses, which would not
otherwise have been incurred by us in the normal course of our organic
business operations, with respect to each acquisition. We believe that
providing non-GAAP information for acquisition related expense items in
addition to the corresponding GAAP information allows the users of our
financial statements to better review and understand the historic and
current results of our continuing operations, and also facilitates
comparisons to our historical results and results of less acquisitive peer
companies, both with and without such adjustments.

(4) Income Tax Effect of Non-GAAP Exclusions. We believe providing financial
information with and without the income tax effect of excluding items
related to our non-GAAP financial measures provide our management and users
of the financial statements with better clarity regarding the on-going
performance and future liquidity of our business.

(5) Non-GAAP Diluted Earnings Per Share Item. We provide non-GAAP diluted
earnings per share. The non-GAAP diluted earnings per share amount was
calculated based on our non-GAAP net income and the weighted-average number
of shares outstanding during the reporting period. The non-GAAP diluted
earnings per share included additional dilution from potential issuance of
common stock, except when such issuances would be anti-dilutive.

                              SolarWinds, Inc.
     Reconciliation of Free Cash Flow to GAAP Cash Flows From Operating
                                 Activities
                               (In thousands)
                                (Unaudited)


                                                      Three Months Ended
                                                           March 31,
                                                   ------------------------
                                                       2012         2011
                                                   -----------  -----------

Reconciliation of free cash flow to GAAP cash
 flows from operating activities:
  GAAP cash flows from operating activities        $    28,339  $    18,866
  Excess tax benefit from stock-based compensation       3,309        3,565
  Purchases of property and equipment                     (771)        (598)
                                                   -----------  -----------
  Free cash flow (1)                               $    30,877  $    21,833
                                                   ===========  ===========

(1)    Free Cash Flow:  We define free cash flow as cash flows from
operating activities plus the excess tax benefit from stock-based
compensation and less the purchase of property and equipment.  We believe
free cash flow is an important liquidity measure that reflects the cash
generated by the business after the purchase of property and equipment that
can then be used for, among other things, strategic acquisitions and
investments in the business, stock repurchases and funding ongoing
operations.

                              SolarWinds, Inc.
              Condensed Consolidated Statements of Cash Flows
                               (In thousands)
                                (Unaudited)


                                                      Three Months Ended
                                                           March 31,
                                                   ------------------------
                                                       2012         2011
                                                   -----------  -----------
Cash flows from operating activities
  Net income                                       $    17,131  $    11,710
  Adjustments to reconcile net income to net cash
   provided by operating activities:
    Depreciation and amortization                        4,296        1,832
    Provision for doubtful accounts                         40          (11)
    Stock-based compensation expense                     3,865        2,669
    Deferred taxes                                        (495)        (472)
    Excess tax benefit from stock-based
     compensation                                       (3,309)      (3,565)
    Other non-cash expenses                                382          110
  Changes in operating assets and liabilities, net
   of assets acquired and liabilities assumed in
   business combinations:
    Accounts receivable                                   (814)        (288)
    Income taxes receivable                                 50           10
    Prepaid and other current assets                        73        1,420
    Accounts payable                                       362         (278)
    Accrued liabilities                                 (1,394)      (2,885)
    Income taxes payable                                 3,216        5,421
    Deferred revenue and other liabilities               4,936        3,193
                                                   -----------  -----------
      Net cash provided by operating activities         28,339       18,866

Cash flows from investing activities
  Purchases of short-term investments                  (11,948)           -
  Maturities of investments                              9,540            -
  Purchases of property and equipment                     (771)        (598)
  Purchases of intangible assets and other                (141)        (108)
  Acquisition of businesses, net of cash acquired      (11,034)     (23,000)
  Earnout payments for acquisitions                     (3,203)      (3,743)
                                                   -----------  -----------
      Net cash used in investing activities            (17,557)     (27,449)

Cash flows from financing activities
  Repurchase of common stock                            (1,334)        (305)
  Exercise of stock options                              3,256        5,193
  Excess tax benefit from stock-based compensation       3,309        3,565
                                                   -----------  -----------
      Net cash provided by financing activities          5,231        8,453
Effect of exchange rate changes on cash and cash
 equivalents                                               616        1,444
                                                   -----------  -----------
  Net increase in cash and cash equivalents             16,629        1,314
Cash and cash equivalents
  Beginning of period                                  122,707      142,003
                                                   -----------  -----------
  End of period                                    $   139,336  $   143,317
                                                   ===========  ===========

Supplemental disclosure of cash flow information
  Cash paid for income taxes                       $     3,812  $        88
                                                   ===========  ===========
Noncash investing transactions
  Accrued earnout                                  $       951  $     3,938
                                                   ===========  ===========

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