ATLANTA, Sept. 7,
2023 /PRNewswire/ -- Secureworks® (NASDAQ:
SCWX), a global leader in cybersecurity, today announced financial
results for its second quarter, which ended on August 4,
2023.
Key Highlights
- Secureworks Taegis™ annual recurring revenue (ARR) grew to
$276 million, an increase of 37% on a
year-over-year basis.
- Taegis second quarter revenue grew 55% year-over-year to
$66.4 million.
- Taegis GAAP gross margin and non-GAAP gross margin continued to
expand in the second quarter, reaching 68.8% and 70.7%,
respectively.
"We expanded our Partner First ecosystem this quarter with
global, market-leading partners, increasing our scale and market
reach to further position our business for growth," said
Wendy Thomas, CEO, Secureworks. "As
an open XDR platform that combines security analytics, AI, threat
intelligence and automation, Taegis is empowering organizations to
say goodbye to point solution chaos and embrace a platform-based
approach that results in better security outcomes, optimized
resources and the highest return on investment for our customers
and partners."
"I'm pleased that we delivered against our financial commitments
in the second quarter," said Alpana
Wegner, Chief Financial Officer, Secureworks. "The progress
we are making on the acceleration of Other MSS end-of-life, which
is allowing us to streamline our operating costs, and our expanded
use of automation to drive scale into our growing SaaS business,
gives us a clear path to breakeven adjusted EBITDA for fourth
quarter this year and cash flow generation next year."
Second Quarter Fiscal 2024 Financial Highlights
- Total revenue for the second quarter was $93.0 million, compared to $116.2 million in the second quarter of fiscal
2023.
- Taegis revenue for the second quarter was $66.4 million, compared to $42.8 million in the second quarter of fiscal
2023.
- GAAP gross profit was $52.9
million, compared with $66.6
million in the second quarter of fiscal 2023. Non-GAAP gross
profit was $58.0 million, compared
with $71.2 million during the same
period last year.
- GAAP gross profit specific to Taegis was $45.7 million, compared with $27.3 million in the second quarter of fiscal
2023. Non-GAAP Taegis gross profit was $47.0
million, compared with $28.0
million during the same period last year.
- GAAP gross margin for the second quarter was 56.9%, compared
with 57.3% in the same period last year. Non-GAAP gross margin was
62.4%, compared with 61.3% in the second quarter of fiscal
2023.
- GAAP gross margin specific to Taegis was 68.8% for the quarter,
compared with 63.7% in the same period last year. Non-GAAP Taegis
gross margin was 70.7%, compared with 65.5% in the second quarter
of fiscal 2023.
- GAAP net loss was $32.4 million
for the second quarter, or $0.38 per
share, compared with net loss of $24.7
million, or $0.29 per share,
in the same period last year. Non-GAAP net loss was $8.6 million, or $0.10 per share, compared with non-GAAP net loss
of $11.3 million, or $0.13 per share, in the same period last
year.
- Adjusted EBITDA loss for the quarter was $10.3 million, compared with adjusted EBITDA loss
of $14.3 million in the second
quarter of fiscal 2023.
- The company ended the second quarter with $64.9 million in cash and cash equivalents.
Business and Operational Highlights
- Secureworks partnered with EY to launch their Intelligent
Extended Detection & Response (IXDR), powered by Taegis XDR, to
help organizations combat cyber threats.
- Announced integrated partnership with Akamai's Enterprise
Application Access module, a leading zero trust network access
solution.
- Continued executing on our Partner First strategy by launching
in the Middle East, UK&I and
Europe.
- Delivered Taegis platform capabilities, expanding our
automation of investigations and alert triage, directly benefiting
our customers by minimizing the time between detection and
executing a response.
- Recognition and awards in the second quarter of fiscal 2024
include:
-
- Leader in Frost & Sullivan Frost
Radar for XDR, 2023
- Leader in Frost & Sullivan Frost
Radar for VDR, 2023
- Leader in Cybersecurity - Solutions and Services 2023,"
an ISG Provider Lens™ Study
- Notable Vendor in the "Forrester Vulnerability Risk Management
Landscape, Q2 2023" report
Financial Outlook
For the third quarter of fiscal 2024, the Company expects:
- Revenue of $88 million to
$90 million.
- GAAP net loss per share of $0.21
to $0.23 and non-GAAP net loss per
share of $0.05 to $0.07.
Secureworks is providing the following updated guidance for full
fiscal year 2024. The Company expects:
Fiscal Year 2024
Guidance
|
|
Taegis ARR
|
$285M to
$300M
|
Other MSS
ARR
|
$15M or Less
|
Total
revenue
|
$360M to
$368M
|
Taegis
revenue
|
$264M to
$268M
|
GAAP net
loss
|
($94M) to
($99M)
|
|
($1.09) to ($1.15) per
share
|
Non-GAAP net
loss
|
($31M) to
($36M)
|
|
($0.36) to ($0.41) per
share
|
Adjusted
EBITDA
|
($31M) to
($37M)
|
Cash from
operations
|
($70M) to
($80M)
|
Conference Call Information
As previously announced, the Company will hold a conference call
to discuss its second quarter fiscal 2024 results and financial
guidance on September 7, 2023, at 8:00
a.m. U.S. ET. A live audio webcast of the conference call
and the related supplemental financial information will be
accessible on the Company's website at
https://investors.secureworks.com. The webcast and supplemental
information will be archived at the same location.
Operating Metrics
The Company defines annual recurring revenue (ARR) as the value
of its subscription contracts as of a particular date. Because the
Company uses recurring revenue as a leading indicator of future
annual revenue, it includes operational backlog. Operational
backlog is defined as the recurring revenue associated with pending
contracts, which are contracts that have been sold but for which
the service period has not yet commenced.
Non-GAAP Financial Measures
This press release presents information about the Company's
non-GAAP revenue, non-GAAP gross margin, non-GAAP subscription cost
of revenue, non-GAAP professional services cost of revenue,
non-GAAP Taegis Subscription Solutions cost of revenue, non-GAAP
Managed Security Services cost of revenue, non-GAAP gross profit,
non-GAAP subscription gross profit, non-GAAP professional services
gross profit non-GAAP Taegis Subscription Solutions gross profit,
non-GAAP Managed Security Services gross profit, non-GAAP research
and development expenses, non-GAAP sales and marketing expenses,
non-GAAP general and administrative expenses, non-GAAP operating
income (loss), non-GAAP net income (loss), non-GAAP earnings (loss)
per share, adjusted EBITDA, weighted average common shares
outstanding - diluted (non-GAAP), non-GAAP Taegis Subscription
Solutions gross margin, non-GAAP Managed Security Services gross
margin, non-GAAP subscription gross margin and non-GAAP
professional services gross margin, which are non-GAAP financial
measures provided as a supplement to the results provided in
accordance with accounting principles generally accepted in
the United States of America
("GAAP"). A reconciliation of each of the foregoing historical and
forward-looking non-GAAP financial measures to the most directly
comparable historical and forward-looking GAAP financial measure is
provided below for each of the fiscal periods indicated.
Special Note Regarding Forward-Looking Statements
This press release contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. In some cases,
you can identify these statements by such forward-looking words as
"anticipate," "believe," "confidence," "could," "estimate,"
"expect," "guidance," "intend," "may," "plan," "potential,"
"outlook," "should," "will" and "would," or similar words or
expressions that refer to future events or outcomes. Such
forward-looking statements include, but are not limited to, the
statements in this press release with respect to the Company's
expectations regarding revenue, GAAP net loss per share and
non-GAAP net loss per share for the third quarter of fiscal 2024,
and Taegis ARR, other MSS ARR, total revenue, Taegis revenue, GAAP
net loss, GAAP net loss per share, non-GAAP net loss, non-GAAP net
loss per share, weighted average common shares outstanding -
diluted (non-GAAP), adjusted EBITDA, capital expenditures, and cash
from operations for full year fiscal 2024, all of which reflect the
Company's current analysis of existing trends and information.
These forward-looking statements represent the Company's judgment
only as of the date of this press release.
Actual results and events in future periods may differ
materially from those expressed or implied by these forward-looking
statements because of risks, uncertainties and other factors that
include, but are not limited to, the following: the Company's
ability to achieve or maintain profitability; the Company's ability
to enhance its existing solutions and technologies and to develop
or acquire new solutions and technologies; the Company's ability to
navigate economic conditions, geopolitical uncertainty and
financial market volatility; the Company's reliance on personnel
with extensive information security expertise; the Company's
ability to successfully implement its strategic plan to realign and
optimize its investments with its priorities; intense competition
in the Company's markets; the Company's ability to attract new
customers, retain existing customers and increase its annual
contract values; the Company's reliance on customers in the
financial services industry; the Company's ability to manage its
growth effectively; the Company's ability to maintain high-quality
client service and support functions; terms of the Company's
service level agreements with customers that require credits for
service failures or inadequacies; the Company's recognition of
revenue ratably over the terms of its Taegis SaaS applications and
managed security services contracts; the Company's long and
unpredictable sales cycles; risks associated with expansion of the
Company's international sales and operations; the risks associated
with proposed or currently enacted tax statutes, including Internal
Revenue Code Section 174; the Company's exposure to fluctuations in
currency exchange rates or inflation; the effect of new
governmental export or import controls on the Company's business or
any international sanctions compliance program applicable to the
Company; the Company's ability to expand its key distribution
relationships; the Company's technology alliance partnerships; real
or perceived defects, errors or vulnerabilities in the Company's
solutions or the failure of its solutions to prevent a security
breach; the risks associated with cyber-attacks or other data
security incidents; the ability of the Company's solutions to
interoperate with its customers' IT infrastructure; the Company's
ability to use third-party technologies; the effect of evolving
information security and data privacy laws and regulations on the
Company's business; the Company's ability to maintain and enhance
its brand; risks associated with the Company's acquisition of other
businesses; the effect of natural disasters, public health issues,
geopolitical conflict and other catastrophic events on the
Company's ability to serve its customers, including the
Ukrainian/Russian conflict; the Company's reliance on patents to
protect its intellectual property rights; the Company's ability to
protect, maintain or enforce its non-patented intellectual property
rights and proprietary information; claims by third parties of
infringement of their proprietary technology by the Company; the
Company's use of open source technology; risks related to the
Company's relationship with Dell Technologies Inc. and Dell Inc.
and control of the Company by Dell Technologies Inc., which
include, but are not limited to, the effects of a potential
deconsolidation of the Company as a part of the Dell Technologies
Inc. consolidated tax group; and risks related to the volatility of
the price of the Company's Class A common stock.
This list of risks, uncertainties and other factors is not
complete. The Company discusses these matters more fully, as well
as certain risk factors that could affect the Company's business,
financial condition, results of operations and prospects, under the
caption "Risk Factors" in the Company's annual report on Form 10-K
or in the Company's first quarter fiscal 2024 Form 10-Q filing, as
well as in the Company's other SEC filings.
Any or all forward-looking statements the Company makes may turn
out to be wrong and can be affected by inaccurate assumptions the
Company might make or by known or unknown risks, uncertainties and
other factors, including those identified in this press release.
Accordingly, you should not place undue reliance on the
forward-looking statements made in this press release, which speak
only as of its date. The Company does not undertake to update, and
expressly disclaims any obligation to update, any of its
forward-looking statements, whether resulting from circumstances or
events that arise after the date the statements are made, new
information or otherwise.
About Secureworks
Secureworks (NASDAQ: SCWX) is a global cybersecurity leader that
secures human progress with Secureworks® Taegis™, a SaaS-based,
open XDR platform built on 20+ years of real-world threat
intelligence and research, improving customers' ability to detect
advanced threats, streamline and collaborate on investigations, and
automate the right actions.
www.secureworks.com
(Tables Follow)
SECUREWORKS
CORP.
|
Condensed Consolidated
Statements of Operations and Related Financial
Highlights
|
(in thousands, except
per share data and percentages)
|
(unaudited)
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
August 4,
2023
|
|
July 29,
2022
|
|
August 4,
2023
|
|
July 29,
2022
|
Net revenue:
|
|
|
|
|
|
|
|
Subscription
|
$ 76,825
|
|
$
90,322
|
|
$
154,084
|
|
$
184,735
|
Professional
services
|
16,141
|
|
25,860
|
|
33,277
|
|
52,462
|
Total net
revenue
|
92,966
|
|
116,182
|
|
187,361
|
|
237,197
|
Cost of
revenue:
|
|
|
|
|
|
|
|
Subscription
|
30,084
|
|
34,060
|
|
61,103
|
|
66,886
|
Professional
services
|
9,973
|
|
15,519
|
|
21,740
|
|
32,128
|
Total cost of
revenue
|
40,057
|
|
49,579
|
|
82,843
|
|
99,014
|
Gross profit
|
52,909
|
|
66,603
|
|
104,518
|
|
138,183
|
Operating
expenses:
|
|
|
|
|
|
|
|
Research and
development
|
28,236
|
|
33,638
|
|
59,408
|
|
66,969
|
Sales and
marketing
|
31,237
|
|
40,940
|
|
65,763
|
|
80,185
|
General and
administrative
|
20,366
|
|
24,274
|
|
42,629
|
|
49,634
|
Reorganization and
other related charges
|
14,232
|
|
—
|
|
14,232
|
|
—
|
Total operating
expenses
|
94,071
|
|
98,852
|
|
182,032
|
|
196,788
|
Operating
loss
|
(41,162)
|
|
(32,249)
|
|
(77,514)
|
|
(58,605)
|
Interest and other,
net
|
(636)
|
|
131
|
|
(2,382)
|
|
(566)
|
Loss before income
taxes
|
(41,798)
|
|
(32,118)
|
|
(79,896)
|
|
(59,171)
|
Income tax
benefit
|
(9,439)
|
|
(7,399)
|
|
(16,567)
|
|
(12,854)
|
Net loss
|
$
(32,359)
|
|
$ (24,719)
|
|
$
(63,329)
|
|
$
(46,317)
|
|
|
|
|
|
|
|
|
Loss per common share
(basic and diluted)
|
$
(0.38)
|
|
$
(0.29)
|
|
$
(0.74)
|
|
$
(0.55)
|
Weighted-average common
shares outstanding (basic and diluted)
|
86,121
|
|
84,483
|
|
85,776
|
|
84,123
|
|
|
|
|
|
|
|
|
Percentage of
Total Net
Revenue (1)
|
|
|
|
|
|
|
|
Subscription gross
margin
|
60.8 %
|
|
62.3 %
|
|
60.3 %
|
|
63.8 %
|
Professional services
gross margin
|
38.2 %
|
|
40.0 %
|
|
34.7 %
|
|
38.8 %
|
Total gross
margin
|
56.9 %
|
|
57.3 %
|
|
55.8 %
|
|
58.3 %
|
Research and
development expenses
|
30.4 %
|
|
29.0 %
|
|
31.7 %
|
|
28.2 %
|
Sales and marketing
expenses
|
33.6 %
|
|
35.2 %
|
|
35.1 %
|
|
33.8 %
|
General and
administrative expenses
|
21.9 %
|
|
20.9 %
|
|
22.8 %
|
|
20.9 %
|
Reorganization and
other related charges
|
15.3 %
|
|
— %
|
|
7.6 %
|
|
— %
|
Operating
expenses
|
101.2 %
|
|
85.1 %
|
|
97.2 %
|
|
83.0 %
|
Operating
loss
|
(44.3) %
|
|
(27.8) %
|
|
(41.4) %
|
|
(24.7) %
|
Loss before income
taxes
|
(45.0) %
|
|
(27.6) %
|
|
(42.6) %
|
|
(24.9) %
|
Net loss
|
(34.8) %
|
|
(21.3) %
|
|
(33.8) %
|
|
(19.5) %
|
Effective tax
rate
|
22.6 %
|
|
23.0 %
|
|
20.7 %
|
|
21.7 %
|
Note: Percentage
growth rates are calculated based on underlying data in
thousands
|
|
|
(1)
|
Financial measures as a
percentage of revenue are calculated based on total GAAP net
revenue, except for GAAP subscription gross margin and GAAP
professional services gross margin measures, which are calculated
based on each of their respective GAAP net revenue
measures.
|
SECUREWORKS
CORP.
|
Condensed Consolidated
Statements of Financial Position
|
(in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 4,
2023
|
|
February 3,
2023
|
Assets:
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
$
64,899
|
|
$
143,517
|
|
Accounts receivable,
net
|
|
|
56,436
|
|
72,627
|
|
Inventories,
net
|
|
|
774
|
|
620
|
|
Other current
assets
|
|
|
17,353
|
|
17,526
|
|
|
Total current
assets
|
|
|
139,462
|
|
234,290
|
Property and equipment,
net
|
|
|
3,151
|
|
4,632
|
Operating lease
right-of-use assets, net
|
|
|
5,883
|
|
9,256
|
Goodwill
|
|
|
425,494
|
|
425,519
|
Intangible assets,
net
|
|
|
92,559
|
|
106,208
|
Other non-current
assets
|
|
|
71,147
|
|
60,965
|
|
|
Total assets
|
|
|
$
737,696
|
|
$
840,870
|
Liabilities and
Stockholders' Equity:
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
|
$
11,212
|
|
$
18,847
|
|
Accrued and other
current liabilities
|
|
|
62,290
|
|
81,566
|
|
Short-term deferred
revenue
|
|
|
134,477
|
|
145,170
|
|
|
Total current
liabilities
|
|
|
207,979
|
|
245,583
|
Long-term deferred
revenue
|
|
|
7,893
|
|
11,162
|
Operating lease
liabilities, non-current
|
|
|
9,865
|
|
12,141
|
Other non-current
liabilities
|
|
|
7,489
|
|
14,023
|
|
|
Total
liabilities
|
|
|
233,226
|
|
282,909
|
Total stockholders'
equity
|
|
|
504,470
|
|
557,961
|
Total liabilities and
stockholders' equity
|
|
|
$
737,696
|
|
$
840,870
|
SECUREWORKS
CORP.
|
Condensed Consolidated
Statements of Cash Flows
|
(in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
August 4,
2023
|
|
July 29,
2022
|
Cash flows from
operating activities:
|
|
|
|
|
Net loss
|
|
$
(63,329)
|
|
$
(46,317)
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
17,961
|
|
18,515
|
Amortization of right
of use asset
|
|
1,303
|
|
1,932
|
Reorganization and
other related charges
|
|
3,272
|
|
—
|
Amortization of costs
capitalized to obtain revenue contracts
|
|
8,820
|
|
8,985
|
Amortization of costs
capitalized to fulfill revenue contracts
|
|
1,805
|
|
2,565
|
Stock-based
compensation expense
|
|
14,890
|
|
17,938
|
Effects of exchange
rate changes on monetary assets and liabilities denominated in
foreign currencies
|
|
2,205
|
|
516
|
Income tax
benefit
|
|
(16,567)
|
|
(12,854)
|
Provision for credit
losses
|
|
(132)
|
|
(102)
|
Changes in assets and
liabilities:
|
|
|
|
|
Accounts
receivable
|
|
16,026
|
|
14,329
|
Net transactions with
Dell
|
|
(118)
|
|
(592)
|
Inventories
|
|
(154)
|
|
30
|
Other
assets
|
|
(4,699)
|
|
(6,933)
|
Accounts
payable
|
|
(7,981)
|
|
5,685
|
Deferred
revenue
|
|
(14,483)
|
|
(17,165)
|
Operating leases,
net
|
|
(3,024)
|
|
(2,801)
|
Accrued and other
liabilities
|
|
(25,756)
|
|
(25,145)
|
Net cash used in
operating activities
|
|
(69,961)
|
|
(41,414)
|
Cash flows from
investing activities:
|
|
|
|
|
Capital
expenditures
|
|
(530)
|
|
(827)
|
Software development
costs
|
|
(2,416)
|
|
(2,840)
|
Net cash used in
investing activities
|
|
(2,946)
|
|
(3,667)
|
Cash flows from
financing activities:
|
|
|
|
|
Taxes paid on vested
restricted shares
|
|
(5,711)
|
|
(8,087)
|
Net cash used in
financing activities
|
|
(5,711)
|
|
(8,087)
|
Net decrease in cash
and cash equivalents
|
|
(78,618)
|
|
(53,168)
|
Cash and cash
equivalents at beginning of the period
|
|
143,517
|
|
220,655
|
Cash and cash
equivalents at end of the period
|
|
$
64,899
|
|
$
167,487
|
Non-GAAP Financial Measures
This press release presents information about the Company's
non-GAAP revenue, non-GAAP gross margin, non-GAAP subscription cost
of revenue, non-GAAP professional services cost of revenue,
non-GAAP Taegis Subscription Solutions cost of revenue, non-GAAP
Managed Security Services cost of revenue, non-GAAP gross profit,
non-GAAP subscription gross profit, non-GAAP professional services
gross profit, non-GAAP Taegis Subscription Solutions gross profit,
non-GAAP Managed Security Services gross profit, non-GAAP research
and development expenses, non-GAAP sales and marketing expenses,
non-GAAP general and administrative expenses, non-GAAP operating
income (loss), non-GAAP net income (loss), non-GAAP earnings (loss)
per share, adjusted EBITDA, weighted average common shares
outstanding - diluted (non-GAAP), non-GAAP Taegis Subscription
Solutions gross margin, non-GAAP Managed Security Services gross
margin, non-GAAP subscription gross margin and non-GAAP
professional services gross margin, which are non-GAAP financial
measures provided as a supplement to the results provided in
accordance with GAAP. A detailed discussion of our reasons for
including these non-GAAP financial measures, the limitations
associated with these measures, the items excluded from these
measures, and our reason for excluding those items are presented in
"Management's Discussion and Analysis of Financial Condition and
Results of Operations — Non-GAAP Financial Measures" in our
periodic reports filed with the SEC. The Company encourages
investors to review the non-GAAP discussion in these reports in
conjunction with the presentation of non-GAAP financial
measures.
(Tables Follow)
SECUREWORKS
CORP.
|
Reconciliation of GAAP
to Non-GAAP Financial Measures
|
(in thousands, except
per share data)
|
(unaudited)
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
August 4,
2023
|
|
July 29,
2022
|
|
August 4,
2023
|
|
July 29,
2022
|
GAAP net
revenue:
|
|
|
|
|
|
|
|
Taegis Subscription
Solutions
|
$
66,426
|
|
$
42,809
|
|
$
129,022
|
|
$
80,025
|
Managed Security
Services
|
10,399
|
|
47,513
|
|
25,062
|
|
104,710
|
Total Subscription
revenue
|
76,825
|
|
90,322
|
|
154,084
|
|
184,735
|
Professional
services
|
16,141
|
|
25,860
|
|
33,277
|
|
52,462
|
GAAP net
revenue(1)
|
$
92,966
|
|
$
116,182
|
|
$
187,361
|
|
$
237,197
|
|
|
|
|
|
|
|
|
GAAP Taegis
Subscription Solutions cost of revenue
|
$
20,740
|
|
$
15,537
|
|
$
40,648
|
|
$
27,992
|
Amortization of
intangibles
|
(1,127)
|
|
(704)
|
|
(2,196)
|
|
(1,559)
|
Stock-based
compensation expense
|
(169)
|
|
(67)
|
|
(248)
|
|
(108)
|
Non-GAAP Taegis
Subscription Solutions cost of revenue
|
$
19,444
|
|
$
14,766
|
|
$
38,204
|
|
$
26,325
|
|
|
|
|
|
|
|
|
GAAP Managed Security
Services cost of revenue
|
$
9,344
|
|
$
18,523
|
|
$
20,455
|
|
$
38,894
|
Amortization of
intangibles
|
(3,410)
|
|
(3,411)
|
|
(6,821)
|
|
(6,821)
|
Stock-based
compensation expense
|
(40)
|
|
(100)
|
|
(107)
|
|
(182)
|
Non-GAAP Managed
Security Services cost of revenue
|
$
5,894
|
|
$
15,012
|
|
$
13,527
|
|
$
31,891
|
|
|
|
|
|
|
|
|
GAAP subscription cost
of revenue
|
$
30,084
|
|
$
34,060
|
|
$
61,103
|
|
$
66,886
|
Amortization of
intangibles
|
(4,537)
|
|
(4,115)
|
|
(9,017)
|
|
(8,380)
|
Stock-based
compensation expense
|
(209)
|
|
(167)
|
|
(355)
|
|
(290)
|
Non-GAAP subscription
cost of revenue
|
$
25,338
|
|
$
29,778
|
|
$
51,731
|
|
$
58,216
|
|
|
|
|
|
|
|
|
GAAP professional
services cost of revenue
|
$
9,973
|
|
$
15,519
|
|
$
21,740
|
|
$
32,128
|
Stock-based
compensation expense
|
(322)
|
|
(345)
|
|
(647)
|
|
(732)
|
Non-GAAP professional
services cost of revenue
|
$
9,651
|
|
$
15,174
|
|
$
21,093
|
|
$
31,396
|
|
|
|
|
|
|
|
|
GAAP gross
profit
|
$
52,909
|
|
$
66,603
|
|
$
104,518
|
|
$
138,183
|
Amortization of
intangibles
|
4,537
|
|
4,115
|
|
9,017
|
|
8,380
|
Stock-based
compensation expense
|
532
|
|
511
|
|
1,003
|
|
1,021
|
Non-GAAP gross
profit
|
$
57,978
|
|
$
71,229
|
|
$
114,538
|
|
$
147,584
|
|
|
|
|
|
|
|
|
GAAP Taegis
Subscription Solutions gross profit
|
$
45,686
|
|
$
27,272
|
|
$
88,374
|
|
$
52,033
|
Amortization of
intangibles
|
1,127
|
|
704
|
|
2,196
|
|
1,559
|
Stock-based
compensation expense
|
169
|
|
67
|
|
248
|
|
108
|
Non-GAAP Taegis
Subscription Solutions gross profit
|
$
46,982
|
|
$
28,043
|
|
$
90,818
|
|
$
53,700
|
|
|
|
|
|
|
|
|
GAAP research and
development expenses
|
$
28,236
|
|
$
33,638
|
|
$
59,408
|
|
$
66,969
|
Stock-based
compensation expense
|
(2,681)
|
|
(2,640)
|
|
(5,283)
|
|
(5,383)
|
Non-GAAP research and
development expenses
|
$
25,555
|
|
$
30,998
|
|
$
54,125
|
|
$
61,586
|
|
|
|
|
|
|
|
|
GAAP sales and
marketing expenses
|
$
31,237
|
|
$
40,940
|
|
$
65,763
|
|
$
80,185
|
Stock-based
compensation expense
|
(1,097)
|
|
(1,627)
|
|
(1,938)
|
|
(3,265)
|
Non-GAAP sales and
marketing expenses
|
$
30,140
|
|
$
39,313
|
|
$
63,825
|
|
$
76,920
|
|
|
|
|
|
|
|
|
GAAP general and
administrative expenses
|
$
20,366
|
|
$
24,274
|
|
$
42,629
|
|
$
49,634
|
Amortization of
intangibles
|
(3,523)
|
|
(3,523)
|
|
(7,047)
|
|
(7,047)
|
Stock-based
compensation expense
|
(3,310)
|
|
(4,034)
|
|
(6,666)
|
|
(8,269)
|
Non-GAAP general and
administrative expenses
|
$
13,533
|
|
$
16,717
|
|
$
28,916
|
|
$
34,318
|
|
|
|
|
|
|
|
|
GAAP operating
loss
|
$
(41,162)
|
|
$
(32,249)
|
|
$
(77,514)
|
|
$
(58,605)
|
Amortization of
intangibles
|
8,060
|
|
7,638
|
|
16,064
|
|
15,427
|
Stock-based
compensation expense
|
7,620
|
|
8,812
|
|
14,890
|
|
17,938
|
Reorganization and
other related charges
|
14,232
|
|
—
|
|
14,232
|
|
—
|
Non-GAAP operating
(loss) income
|
$
(11,250)
|
|
$
(15,799)
|
|
$
(32,328)
|
|
$
(25,240)
|
|
|
|
|
|
|
|
|
GAAP net
loss
|
$
(32,359)
|
|
$
(24,719)
|
|
$
(63,329)
|
|
$
(46,317)
|
Amortization of
intangibles
|
8,060
|
|
7,638
|
|
16,064
|
|
15,427
|
Stock-based
compensation expense
|
7,620
|
|
8,812
|
|
14,890
|
|
17,938
|
Reorganization and
other related charges
|
14,232
|
|
—
|
|
14,232
|
|
—
|
Aggregate adjustment
for income taxes
|
(6,173)
|
|
(3,024)
|
|
(7,613)
|
|
(5,944)
|
Non-GAAP net (loss)
income
|
$
(8,620)
|
|
$
(11,293)
|
|
$
(25,756)
|
|
$
(18,896)
|
|
|
|
|
|
|
|
|
GAAP loss per
share
|
$
(0.38)
|
|
$
(0.29)
|
|
$
(0.74)
|
|
$
(0.55)
|
Amortization of
intangibles
|
0.10
|
|
0.09
|
|
0.19
|
|
0.18
|
Stock-based
compensation expense
|
0.08
|
|
0.10
|
|
0.17
|
|
0.21
|
Reorganization and
other related charges
|
0.17
|
|
—
|
|
0.17
|
|
—
|
Aggregate adjustment
for income taxes
|
(0.07)
|
|
(0.04)
|
|
(0.09)
|
|
(0.07)
|
Non-GAAP (loss)
earnings per share *
|
$
(0.10)
|
|
$
(0.13)
|
|
$
(0.30)
|
|
$
(0.22)
|
* Sum of reconciling
items may differ from total due to rounding of individual
components
|
|
|
|
|
|
|
|
|
GAAP net
loss
|
$
(32,359)
|
|
$
(24,719)
|
|
$
(63,329)
|
|
$
(46,317)
|
Interest and other,
net
|
636
|
|
(131)
|
|
2,382
|
|
566
|
Income tax
benefit
|
(9,439)
|
|
(7,399)
|
|
(16,567)
|
|
(12,854)
|
Depreciation and
amortization
|
8,981
|
|
9,132
|
|
17,961
|
|
18,515
|
Stock-based
compensation expense
|
7,620
|
|
8,812
|
|
14,890
|
|
17,938
|
Reorganization and
other related charges
|
14,232
|
|
—
|
|
14,232
|
|
—
|
Adjusted
EBITDA
|
$
(10,329)
|
|
$
(14,305)
|
|
$
(30,431)
|
|
$
(22,152)
|
|
|
(1)
|
Historically the
Company has presented non-GAAP net revenue as a financial measure.
There are no such adjustments that give rise to non-GAAP net
revenue for any of the periods presented.
|
SECUREWORKS
CORP.
|
Reconciliation of GAAP
to Non-GAAP Financial Measures
|
(unaudited)
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
Percentage of Total
Net Revenue
|
|
August 4,
2023
|
|
July 29,
2022
|
|
August 4,
2023
|
|
July 29,
2022
|
|
|
|
|
|
|
|
|
|
GAAP Taegis
Subscription Solutions gross margin
|
|
68.8 %
|
|
63.7 %
|
|
68.5 %
|
|
65.0 %
|
Non-GAAP
adjustment
|
|
1.9 %
|
|
1.8 %
|
|
1.9 %
|
|
2.1 %
|
Non-GAAP Taegis
Subscription Solutions gross margin
|
|
70.7 %
|
|
65.5 %
|
|
70.4 %
|
|
67.1 %
|
|
|
|
|
|
|
|
|
|
GAAP Managed Security
Services gross margin
|
|
10.1 %
|
|
61.0 %
|
|
18.4 %
|
|
62.9 %
|
Non-GAAP
adjustment
|
|
33.2 %
|
|
7.4 %
|
|
27.6 %
|
|
6.6 %
|
Non-GAAP Managed
Security Services gross margin
|
|
43.3 %
|
|
68.4 %
|
|
46.0 %
|
|
69.5 %
|
|
|
|
|
|
|
|
|
|
GAAP subscription gross
margin
|
|
60.8 %
|
|
62.3 %
|
|
60.3 %
|
|
63.8 %
|
Non-GAAP
adjustment
|
|
6.2 %
|
|
4.7 %
|
|
6.1 %
|
|
4.7 %
|
Non-GAAP subscription
gross margin
|
|
67.0 %
|
|
67.0 %
|
|
66.4 %
|
|
68.5 %
|
|
|
|
|
|
|
|
|
|
GAAP professional
services gross margin
|
|
38.2 %
|
|
40.0 %
|
|
34.7 %
|
|
38.8 %
|
Non-GAAP
adjustment
|
|
2.0 %
|
|
1.3 %
|
|
1.9 %
|
|
1.4 %
|
Non-GAAP professional
services gross margin
|
|
40.2 %
|
|
41.3 %
|
|
36.6 %
|
|
40.2 %
|
|
|
|
|
|
|
|
|
|
GAAP gross
margin
|
|
56.9 %
|
|
57.3 %
|
|
55.8 %
|
|
58.3 %
|
Non-GAAP
adjustment
|
|
5.5 %
|
|
4.0 %
|
|
5.3 %
|
|
3.9 %
|
Non-GAAP gross
margin
|
|
62.4 %
|
|
61.3 %
|
|
61.1 %
|
|
62.2 %
|
|
|
|
|
|
|
|
|
|
GAAP research and
development expenses
|
|
30.4 %
|
|
29.0 %
|
|
31.7 %
|
|
28.2 %
|
Non-GAAP
adjustment
|
|
(2.9) %
|
|
(2.3) %
|
|
(2.8) %
|
|
(2.2) %
|
Non-GAAP research and
development expenses
|
|
27.5 %
|
|
26.7 %
|
|
28.9 %
|
|
26.0 %
|
|
|
|
|
|
|
|
|
|
GAAP sales and
marketing expenses
|
|
33.6 %
|
|
35.2 %
|
|
35.1 %
|
|
33.8 %
|
Non-GAAP
adjustment
|
|
(1.2) %
|
|
(1.4) %
|
|
(1.0) %
|
|
(1.4) %
|
Non-GAAP sales and
marketing expenses
|
|
32.4 %
|
|
33.8 %
|
|
34.1 %
|
|
32.4 %
|
|
|
|
|
|
|
|
|
|
GAAP general and
administrative expenses
|
|
21.9 %
|
|
20.9 %
|
|
22.8 %
|
|
20.9 %
|
Non-GAAP
adjustment
|
|
(7.3) %
|
|
(6.5) %
|
|
(7.4) %
|
|
(6.4) %
|
Non-GAAP general and
administrative expenses
|
|
14.6 %
|
|
14.4 %
|
|
15.4 %
|
|
14.5 %
|
|
|
|
|
|
|
|
|
|
GAAP operating
loss
|
|
(44.3) %
|
|
(27.8) %
|
|
(41.4) %
|
|
(24.7) %
|
Non-GAAP
adjustment
|
|
32.2 %
|
|
14.2 %
|
|
24.1 %
|
|
14.1 %
|
Non-GAAP operating
(loss) income
|
|
(12.1) %
|
|
(13.6) %
|
|
(17.3) %
|
|
(10.6) %
|
|
|
|
|
|
|
|
|
|
GAAP net
loss
|
|
(34.8) %
|
|
(21.3) %
|
|
(33.8) %
|
|
(19.5) %
|
Non-GAAP
adjustment
|
|
25.5 %
|
|
11.6 %
|
|
20.1 %
|
|
11.5 %
|
Non-GAAP net (loss)
income
|
|
(9.3) %
|
|
(9.7) %
|
|
(13.7) %
|
|
(8.0) %
|
SECUREWORKS
CORP.
|
Reconciliation of GAAP
to Non-GAAP Financial Measures
|
(in millions, except
per share data)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ending
|
|
Fiscal Year
Ending
|
|
|
November 3,
2023
|
|
February 2,
2024
|
|
|
Low End of
Guidance
|
|
High End of
Guidance
|
|
Low End of
Guidance
|
|
High End of
Guidance
|
GAAP net
revenue
|
|
$
88
|
|
$
90
|
|
$
360
|
|
$
368
|
|
|
|
|
|
|
|
|
|
GAAP net
loss
|
|
$
(20)
|
|
$
(18)
|
|
$
(99)
|
|
$
(94)
|
Amortization of
intangibles
|
|
7
|
|
7
|
|
28
|
|
28
|
Stock-based
compensation expense
|
|
12
|
|
12
|
|
38
|
|
38
|
Aggregate adjustment
for income taxes
|
|
(4)
|
|
(4)
|
|
(16)
|
|
(16)
|
Non-GAAP net
loss*
|
|
$
(6)
|
|
$
(5)
|
|
$
(36)
|
|
$
(31)
|
|
|
|
|
|
|
|
|
|
GAAP net loss per
share
|
|
$
(0.23)
|
|
$
(0.21)
|
|
$
(1.15)
|
|
$
(1.09)
|
Amortization of
intangibles
|
|
0.08
|
|
0.08
|
|
0.32
|
|
0.32
|
Stock-based
compensation expense
|
|
0.13
|
|
0.13
|
|
0.44
|
|
0.44
|
Aggregate adjustment
for income taxes
|
|
(0.05)
|
|
(0.05)
|
|
(0.18)
|
|
(0.18)
|
Non-GAAP net loss per
share*
|
|
$
(0.07)
|
|
$
(0.05)
|
|
$
(0.41)
|
|
$
(0.36)
|
|
|
|
|
|
|
|
|
|
GAAP net
loss
|
|
|
|
|
|
$
(99)
|
|
$
(94)
|
Interest and other,
net
|
|
|
|
|
|
5
|
|
5
|
Income tax
benefit
|
|
|
|
|
|
(27)
|
|
(26)
|
Depreciation and
amortization
|
|
|
|
|
|
32
|
|
32
|
Reorganization and
other related charges
|
|
|
|
|
|
14
|
|
14
|
Stock-based
compensation expense
|
|
|
|
|
|
38
|
|
38
|
Adjusted
EBITDA*
|
|
|
|
|
|
$
(37)
|
|
$
(31)
|
|
|
|
|
|
|
|
|
|
Other Items
|
|
|
|
|
|
|
|
|
Effective tax
rate
|
|
|
|
|
|
|
|
22 %
|
Weighted average
shares outstanding (in millions) – diluted (non-GAAP)
|
|
|
|
|
|
|
|
86.3
|
Cash flow from
operations
|
|
|
|
|
|
$(80) to
$(70)
|
Capital
expenditures
|
|
|
|
|
|
|
|
$6 to $8
|
|
|
*
|
Sum of reconciling
items may differ from total due to rounding of individual
components
|
|
Sum of quarterly
guidance may differ from full year guidance due to
rounding
|
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multimedia:https://www.prnewswire.com/news-releases/secureworks-announces-second-quarter-fiscal-2024-results-301920333.html
SOURCE Secureworks, Inc.