- Revenue increased 12 percent
year-over-year to $116 million.
- Gross margin increased 250 basis points
over last year; non-GAAP gross margin increased 210 basis points
over last year.
- Net cash provided by operating
activities was $11.2 million for the three months ended August 4,
2017.
- Increased Fiscal Year 2018 Revenue
guidance to be in the range of $462 to $465 million; Non-GAAP
Revenue guidance to be in the range of $463 to $466 million.
SecureWorks (NASDAQ: SCWX), a leading provider of
intelligence-driven information security solutions, today announced
financial results for its second quarter of fiscal 2018, which
ended August 4, 2017.
“We delivered solid performance this quarter driven by
double-digit revenue growth, continued gross margin expansion, a
narrowing of our net loss and strong operating cash flow,” said
Michael R. Cote, Chief Executive Officer of SecureWorks. “Our
solutions unlock the value of our clients’ cybersecurity
investments, simplify their complex security operations and amplify
their defenses by protecting components of their security
ecosystem. Looking ahead, we remain confident in our position as a
leader in the estimated $20 billion global managed security
services market1 and in our ability to improve sales momentum as
the changes we made to our sales organization take hold in the
second half of the fiscal year.”
Business and operational highlights for the second quarter of
fiscal 2018 include the following:
- SecureWorks was noted as a Leader in
the recent IDC MarketScape: Worldwide Managed Security Service 2017
Vendor Assessment report for “threat intelligence and advanced
threat detection services that are highly sophisticated” and
“Customer feedback [which] included praise for SecureWorks’ portal
improvements, for the breadth of reports, and for the flexibility
of services.”2
- The Company began bundling its Red
Cloak® agent with Server Monitoring, thereby providing advanced
analytics to significantly enhance visibility into potential
threats, and dramatically improving our clients’ security posture
through threat detection and response. This added functionality,
which allows SecureWorks to gather additional security-specific
telemetry, is available for both on-premises and AWS cloud servers
that operate on the Windows platform.
- Shortly after the end of the second
quarter, the Company joined forces with Carbon Black to deliver
managed Advanced Endpoint Threat Prevention (AETP). This fully
managed service features strong endpoint threat prevention via Cb
Defense, a powerful Next-Generation Antivirus (NGAV) product.
SecureWorks Threat Intelligence, backed by its advanced analyst
team and built on the Counter Threat Platform™, adds context and
actionable intelligence to help clients understand and respond to
threats faster. Preventing threats and quickly identifying those
that cannot be prevented are key factors in reducing business risk
and the cost of a breach for clients.
- The company has expanded its program to
orchestrate threat prevention to include certain products from Palo
Alto Networks®, Cisco Systems® and Juniper Networks® as a part of
the SecureWorks managed solution portfolio. This solution delivers
SecureWorks’ proprietary intelligence to market-leading network
security control points, providing proactive protection from
emerging threats.
- At this year’s annual Black Hat
conference, SecureWorks’ Counter Threat Unit released a new threat
analysis detailing an intricate, year-long cyber-espionage campaign
which used targeted spearphishing and social engineering. By
combining robust threat intelligence with its powerful technology,
SecureWorks alerted its clients to this campaign in early
2017.
- The Company teamed up with the National
Health Information Sharing and Analysis Center (NH-ISAC) to provide
critical cybersecurity services to its member organizations as part
the NH-ISAC’s CYBERFIT® services.
____________________
1 Source: Frost & Sullivan estimates the global managed
security services market will grow an average of 16 percent over
the next four years, reaching approximately $20 billion by 2020. 2
Source: “IDC MarketScape: Worldwide Managed Security Services 2017
Vendor Assessment.” Doc # US41320917, Aug 2017
Second Quarter Fiscal 2018 Financial Results
Highlights
- Revenue increased 12.0 percent to
$116.1 million from $103.7 million in the second quarter of fiscal
2017. Non-GAAP revenue increased 11.9 percent to $116.3 million
from $103.9 million in the second quarter of fiscal 2017.
- Gross margin was 51.5 percent, up from
49.0 percent in the second quarter of fiscal 2017. Non-GAAP gross
margin increased to 54.7 percent from 52.6 percent in the second
quarter of fiscal 2017. The increase in GAAP and non-GAAP gross
margins was mainly driven by efficiencies as the Company continues
to leverage its global service delivery model and improve its
technology and processes.
- Operating loss was $18.7 million
compared to $20.0 million in the second quarter of fiscal 2017;
non-GAAP operating loss was $7.8 million compared to $9.6 million
in the second quarter of last year.
- Net loss was $12.1 million, or $0.15
per share, compared to a net loss of $12.1 million, or $0.15 per
share, in the second quarter of fiscal 2017. Non-GAAP net loss was
$5.4 million, or $0.07 per share, compared to a non-GAAP net loss
of $5.6 million, or $0.07 per share, in the second quarter of
fiscal 2017.
- Adjusted EBITDA loss was $4.6 million,
compared to an adjusted EBITDA loss of $7.0 million in the second
quarter of fiscal 2017.
- Cash used by operating activities for
the six months ended August 4, 2017 was $8.4 million and cash
provided by operating activities in second quarter of fiscal 2018
was $11.2 million.
- The number of weighted average shares
outstanding during the second quarter was approximately 80.353
million.
- Monthly recurring revenue as of August
4, 2017 increased 8.4 percent to $32.3 million from $29.8 million
as of July 29, 2016. The Company’s monthly recurring revenue metric
represents the monthly value of its subscription contracts,
including operational backlog, as of period end.
Third Quarter and Full Fiscal Year 2018 Guidance
Based on current market conditions, second quarter performance
and the continued investment in its sales organization, the Company
expects the following results for the third quarter ending on
November 3, 2017 and the full fiscal year ending on February 2,
2018:
For the third quarter, the Company expects:
- Revenue to be in the range of $115 to
$116 million on both a GAAP and non-GAAP basis.
- Net loss per share to be in the range
of $0.17 to $0.19 and non-GAAP net loss per share to be in the
range of $0.09 to $0.10.
- Approximately 80.362 million weighted
average shares to be outstanding during the third quarter of fiscal
2018.
For fiscal year 2018, the Company now expects the following
results, updating previously announced full year guidance:
- Revenue to be in the range of $462 to
$465 million and non-GAAP revenue to be in the range of $463 to
$466 million.
- Net loss to be in the range of $52 to
$54 million and adjusted EBITDA loss to be in the range of $21 to
$25 million.
- Net loss per share to be in the range
of $0.65 to $0.68 and non-GAAP net loss per share to be in the
range of $0.29 to $0.32.
In addition, the Company affirmed the following previously
provided guidance:
- Monthly recurring revenue to be in the
range of $34.4 to $36.4 million at the end of the fourth quarter of
fiscal 2018.
- Approximately 80.286 million weighted
average shares to be outstanding during fiscal year 2018.
- Capital expenditures to be
approximately $18 to $20 million.
Conference Call Information
As previously announced, the Company will hold a conference call
to discuss its second quarter performance and outlook for its third
quarter and full fiscal year 2018 on September 6, 2017, at 8:00
a.m. ET. A live audio webcast of the conference call will be
accessible on the company’s website at
http://investors.secureworks.com. The webcast will be archived at
the same location for one year.
Non-GAAP Financial Measures
The press release presents information about the Company’s
non-GAAP revenue, non-GAAP gross margin, non-GAAP research and
development expenses, non-GAAP sales and marketing expenses,
non-GAAP general and administrative expenses, non-GAAP operating
loss, non-GAAP net loss, non-GAAP net loss per share and adjusted
EBITDA, 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 concerning its GAAP and non-GAAP revenue and GAAP and
non-GAAP net loss per share for the third quarter of fiscal 2018
and for full year fiscal 2018, net loss and adjusted EBITDA loss
for full year fiscal 2018, capital expenditures for full year
fiscal 2018, weighted average shares outstanding during the third
quarter of fiscal 2018 and full year fiscal 2018, and monthly
recurring revenue at the end of the fourth quarter of fiscal 2018,
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,
including those relating to: 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 rapidly evolving market in which
the Company operates; the Company’s reliance on personnel with
extensive information security expertise; fluctuations in the
Company’s quarterly results and other operating measures; intense
competition in the Company’s markets; the Company’s ability to
attract new clients, retain existing clients and increase its
annual contract values; the Company’s reliance on its largest
client and on clients 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; the Company’s service level agreements with clients
requiring credits for service failures or inadequacies; the
Company’s ability to continue expansion of its sales force; the
Company’s long and unpredictable sales cycles; risks associated
with the Company’s international sales and operations; 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
ability of the Company’s solutions to interoperate with its
clients’ 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 Company’s recognition of revenue ratably over the
terms of its managed security and threat intelligence contracts;
the effect of timing differences between the expensing of sales
commissions paid to the Company’s strategic and distribution
partners and the recognition of associated revenues; estimates or
judgments relating to the Company’s critical accounting policies;
the Company’s exposure to fluctuations in currency exchange rates;
the effect of governmental export or import controls on the
Company’s business; the Company’s compliance with the Foreign
Corrupt Practices Act and similar laws; the Company’s ability to
maintain effective disclosure controls and procedures; the effect
of natural disasters and other catastrophic events on the Company’s
ability to serve its clients; 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; and risks related to the
Company’s relationship with Dell Technologies Inc. and Dell Inc.
and control of the Company by Dell Technologies Inc.
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
for the fiscal year ended February 3, 2017, 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 as a result
of circumstances or events that arise after the date the statements
are made, new information or otherwise.
About SecureWorks
SecureWorks® (NASDAQ: SCWX) is a leading global cybersecurity
company that keeps organizations safe in a digitally connected
world. We combine visibility from thousands of clients, artificial
intelligence and automation from our industry-leading SecureWorks
Counter Threat Platform™, and actionable insights from our team of
elite researchers and analysts to create a powerful network effect
that provides increasingly strong protection for our clients. By
aggregating and analyzing data from any source, anywhere, we
prevent security breaches, detect malicious activity in real time,
respond rapidly to incidents, and predict emerging threats. We
offer our clients a cyber-defense that is Collectively Smarter.
Exponentially Safer.™ 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, July 29,
August 4, July 29, 2017 2016
2017 2016 Net revenue $ 116,123 $ 103,653 $ 229,716 $
203,446 Cost of revenue 56,325 52,907
110,267 102,756 Gross margin
59,798 50,746 119,449
100,690 Research and development 19,693 17,373 39,172 34,970
Sales and marketing 37,620 31,820 74,789 62,082 General and
administrative 21,138 21,600
44,542 42,685 Total operating expenses
78,451 70,793 158,503
139,737 Operating loss (18,653 ) (20,047 ) (39,054 ) (39,047
) Interest and other, net (425 ) 851
(1,074 ) 1,216 Loss before income taxes (19,078 )
(19,196 ) (40,128 ) (37,831 ) Income tax benefit (6,960 )
(7,145 ) (13,774 ) (14,153 ) Net loss $
(12,118 ) $ (12,051 ) $ (26,354 ) $ (23,678 ) Net loss per
common share (basic and diluted) $ (0.15 ) $ (0.15 ) $ (0.33 ) $
(0.31 )
Weighted-average common shares outstanding
(basic and diluted)
80,353 80,009 80,205 75,169
Percentage of Total
Net Revenue Gross margin 51.5 % 49.0 % 52.0 % 49.5 % Research
and development 17.0 % 16.8 % 17.1 % 17.2 % Sales and marketing
32.4 % 30.7 % 32.6 % 30.5 % General and administrative 18.2 % 20.8
% 19.4 % 21.0 % Operating expenses 67.6 % 68.3 % 69.0 % 68.7 %
Operating loss (16.1 %) (19.3 %) (17.0 %) (19.2 %) Loss before
income taxes (16.4 %) (18.5 %) (17.5 %) (18.6 %) Net loss (10.4 %)
(11.6 %) (11.5 %) (11.6 %) Effective tax rate 36.5 % 37.2 % 34.3 %
37.4 % Note: Percentage growth rates are calculated based on
underlying data in thousands
SECUREWORKS CORP. Condensed Consolidated Statements of
Financial Position (in thousands) (unaudited)
August
4, February 3, 2017 2017
Assets:
Current assets: Cash and cash equivalents $ 97,780 $ 116,595
Accounts receivable, net 122,664 113,546 Inventories, net 1,170
1,947 Other current assets 51,004 51,947 Total
current assets 272,618 284,035 Property and equipment, net 32,779
31,153 Goodwill 416,487 416,487 Purchased Intangible assets, net
248,053 261,921 Other non-current assets 6,091 5,704
Total assets $ 976,028 $ 999,300
Liabilities and
Stockholders’ Equity:
Current liabilities: Accounts payable $ 23,847 $ 24,119 Accrued and
other 56,287 59,704 Short-term deferred revenue 133,811
119,909 Total current liabilities 213,945 203,732 Long-term
deferred revenue 14,644 14,752 Other non-current liabilities
74,993 89,392 Total liabilities 303,582 307,876
Stockholders’ equity
672,446 691,424
Total liabilities and stockholders’
equity
$ 976,028 $ 999,300
SECUREWORKS CORP.
Condensed Consolidated Statements of Cash Flows (in thousands)
(unaudited)
Six Months Ended
August 4, July 29, 2017 2016 Cash flows
from operating activities: Net loss $ (26,354 ) $ (23,678 )
Adjustments to reconcile net loss to net cash used in operating
activities Depreciation and amortization 20,666 19,422 Change in
fair value of convertible notes - 132 Stock-based compensation
expense 7,158 3,365
Effects of exchange rate changes on
monetary assets and liabilities denominated in foreign
currencies
1,456 (1,129 ) Income tax benefit (15,098 ) (14,153 ) Provision for
doubtful accounts 2,591 1,340 Excess tax benefit from share-based
payments - (221 ) Changes in assets and liabilities: Accounts
receivable (12,491 ) 15,388 Net transactions with parent 7,653
(21,032 ) Inventories 778 25 Other assets 606 109 Accounts payable
(269 ) 4,720 Deferred revenue 13,819 2,651 Accrued and other
liabilities (8,930 ) (8,519 ) Net cash used in
operating activities (8,415 ) (21,580 ) Cash flows from investing
activities: Capital expenditures (8,376 ) (7,930 )
Net cash used in investing activities (8,376 ) (7,930 ) Cash flows
from financing activities: Proceeds from IPO, net - 99,604 Capital
contribution from parent, net - 9,547 Excess tax benefit from
share-based payment - 221 Principal payments on financing
arrangement with Dell Financial Services (800 ) - Taxes paid on
vested restricted shares (1,224 ) - Net cash
(used in) provided by financing activities (2,024 ) 109,372 Net
(decrease) increase in cash and cash equivalents (18,815 ) 79,862
Cash and cash equivalents at beginning of the period 116,595
33,422 Cash and cash equivalents at end of the
period $ 97,780 $ 113,284
Non-GAAP Financial Measures
This press release presents information about the Company’s
non-GAAP revenue, non-GAAP gross margin, non-GAAP research and
development expenses, non-GAAP sales and marketing expenses,
non-GAAP general and administrative expenses, non-GAAP operating
loss, non-GAAP net loss, non-GAAP net loss per share and adjusted
EBITDA, which are non-GAAP financial measures provided as a
supplement to the results provided in accordance with GAAP. The
Company believes these non-GAAP financial measures provide useful
information to help evaluate its operating results by facilitating
an enhanced understanding of its operating performance and enabling
more meaningful period-to-period comparisons. There are limitations
to the use of the non-GAAP financial measures presented in the
press release. These non-GAAP financial measures may not be
comparable to similarly titled measures of other companies. Other
companies, including companies in SecureWorks’ industry, may
calculate non-GAAP financial measures differently than the Company
does, limiting the usefulness of those measures for comparative
purposes.
A reconciliation of each non-GAAP financial measure to the most
directly comparable GAAP financial measure is provided below for
each of the periods indicated. Investors are encouraged to review
the reconciliations in conjunction with the presentation of the
non-GAAP financial measures for each of the periods presented. In
future fiscal periods, the Company may exclude such items and may
incur income and expenses similar to these excluded items.
Accordingly, the exclusion of these items and other similar items
in this non-GAAP presentation should not be interpreted as implying
that these items are non-recurring, infrequent or unusual.
The Company excludes the following items from one or more of its
non-GAAP financial measures:
Impact of purchase accounting. The impact of purchase accounting
consists primarily of purchase accounting adjustments related to a
change in the basis of deferred revenue for the going-private
transaction of Dell Inc. (“Dell”), an indirect parent of the
Company, that was completed on October 29, 2013. The Company
believes it is useful to exclude such purchase accounting
adjustments related to the foregoing transactions as this deferred
revenue generally results from multi-year service contracts under
which deferred revenue is established upon sale and revenue is
recognized over the term of the contract. Pursuant to the fair
value provisions applicable to the accounting for business
combinations, GAAP requires this deferred revenue to be recorded at
its fair value, which is typically less than the book value. In
presenting non-GAAP earnings, the Company adds back the reduction
in revenue that results from this revaluation on the expectation
that a significant majority of these service contracts will be
renewed in the future and therefore the revaluation is not helpful
in predicting its ongoing revenue trends. The Company believes that
this non-GAAP financial adjustment is useful to investors because
it allows investors to (1) evaluate the effectiveness of the
methodology and information used by management in its financial and
operational decision-making, and (2) compare past and future
reports of SecureWorks’ financial results, as the revenue reduction
related to acquired deferred revenue will not recur when related
service contracts are renewed in future periods.
Amortization of intangible assets. Amortization of intangible
assets consists of amortization of customer relationships and
acquired technology. In connection with Dell’s going-private
transaction, all of the Company’s tangible and intangible assets
and liabilities were accounted for and recognized at fair value on
the transaction date. Accordingly, for periods after October 29,
2013, amortization of intangible assets consists of amortization
associated with intangible assets recognized in connection with
Dell’s going-private transaction.
Stock-based compensation. Non-cash stock-based compensation
relates to awards under both the Dell Technologies and SecureWorks
equity plans. We exclude such expenses when assessing the
effectiveness of our operating performance since they do not
necessarily correlate with the underlying operating performance of
the business.
Other expenses. Other expenses include professional fees
incurred by the Company in connection with the Company’s initial
public offering and amounts expensed in the settlement of a legal
matter. The Company excludes these expenses for the purpose of
calculating the non-GAAP financial measures because it believes
these items are outside the ordinary course of business and do not
contribute to a meaningful evaluation of its current operating
performance or comparisons to its past operating performance.
Aggregate adjustment for income taxes. The aggregate adjustment
for income taxes is the estimated combined income tax effect for
the adjustments mentioned above. The tax effects are determined
based on the tax jurisdictions where the above items were
incurred.
As the excluded items can have a material impact on earnings,
management compensates for this limitation by relying primarily on
GAAP results and using non-GAAP financial measures supplementally.
The non-GAAP financial measures are not meant to be considered as
indicators of performance in isolation from or as a substitute for
revenue, gross margin, research and development expenses, sales and
marketing expenses, general and administrative expenses, operating
loss or net loss prepared in accordance with GAAP, and should be
read only in conjunction with financial information presented on a
GAAP basis.
(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,
July 29, August 4, July 29, 2017
2016 2017 2016 GAAP revenue $ 116,123 $
103,653 $ 229,716 $ 203,446 Impact of purchase accounting
146 221 292 442
Non-GAAP revenue $ 116,269 $ 103,874 $ 230,008
$ 203,888 GAAP gross margin $ 59,798 $ 50,746 $
119,449 $ 100,690 Amortization of intangibles 3,411 3,411 6,821
6,821 Impact of purchase accounting 156 356 312 617 Stock-based
compensation expense 217 156 441
175 Non-GAAP gross margin $ 63,582 $
54,669 $ 127,023 $ 108,303 GAAP
research and development expenses $ 19,693 $ 17,373 $ 39,172 $
34,970 Stock-based compensation expense (759 ) (688 )
(1,573 ) (770 ) Non-GAAP research and development
expenses $ 18,934 $ 16,685 $ 37,599 $ 34,200
GAAP sales and marketing expenses $ 37,620 $ 31,820 $
74,789 $ 62,082 Stock-based compensation expense (411 )
(362 ) (625 ) (405 ) Non-GAAP sales and
marketing expenses $ 37,209 $ 31,458 $ 74,164
$ 61,677 GAAP general and administrative expenses $
21,138 $ 21,600 $ 44,542 $ 42,685 Amortization of intangibles
(3,523 ) (3,523 ) (7,047 ) (7,047 ) Impact of purchase accounting
(256 ) (177 ) (512 ) (406 ) Stock-based compensation expense (2,143
) (1,799 ) (4,519 ) (2,015 ) Other - -
- (1,164 ) Non-GAAP general and administrative
expenses $ 15,216 $ 16,101 $ 32,464 $ 32,053
GAAP operating loss $ (18,653 ) $ (20,047 ) $ (39,054
) $ (39,047 ) Amortization of intangibles 6,934 6,934 13,868 13,868
Impact of purchase accounting 412 533 824 1,023 Stock-based
compensation expense 3,530 3,005 7,158 3,365 Other -
- - 1,164 Non-GAAP
operating loss $ (7,777 ) $ (9,575 ) $ (17,204 ) $ (19,627 )
GAAP net loss $ (12,118 ) $ (12,051 ) $ (26,354 ) $ (23,678 )
Amortization of intangibles 6,934 6,934 13,868 13,868 Impact of
purchase accounting 412 533 824 1,023 Stock-based compensation
expense 3,530 3,005 7,158 3,365 Other - - - 1,164 Aggregate
adjustment for income taxes (4,122 ) (3,997 )
(7,356 ) (7,419 ) Non-GAAP net loss $ (5,364 ) $ (5,576 ) $
(11,860 ) $ (11,677 ) GAAP net loss per share $ (0.15 ) $
(0.15 ) $ (0.33 ) $ (0.31 ) Amortization of intangibles 0.09 0.09
0.17 0.18 Impact of purchase accounting 0.01 0.01 0.01 0.01
Stock-based compensation expense 0.04 0.04 0.09 0.04 Other - - -
0.02 Aggregate adjustment for income taxes (0.05 )
(0.06 ) (0.09 ) (0.10 ) Non-GAAP net income loss per
share * $ (0.07 ) $ (0.07 ) $ (0.15 ) $ (0.16 ) * Sum of
reconciling items may differ from total due to rounding of
individual components GAAP net loss $ (12,118 ) $ (12,051 )
$ (26,354 ) $ (23,678 ) Interest and other, net 425 (851 ) 1,074
(1,216 ) Income tax benefit (6,960 ) (7,145 ) (13,774 ) (14,153 )
Depreciation and amortization 10,405 9,796 20,666 19,422
Stock-based compensation expense 3,530 3,005 7,158 3,365 Impact of
purchase accounting 146 221 292 442 Other - -
- 1,164 Adjusted EBITDA $ (4,572
) $ (7,025 ) $ (10,938 ) $ (14,654 )
SECUREWORKS CORP.
Reconciliation of GAAP to Non-GAAP Financial Measures (unaudited)
Three Months Ended Six Months Ended August
4, July 29, August 4, July 29, 2017
2016 2017 2016
Percentage of
Total Net Revenue
GAAP gross margin 51.5 % 49.0 % 52.0 % 49.5 % Non-GAAP adjustment
3.2 % 3.6 % 3.2 % 3.6 % Non-GAAP gross margin 54.7 % 52.6 % 55.2 %
53.1 % GAAP research and development expenses 17.0 % 16.8 %
17.1 % 17.2 % Non-GAAP adjustment (0.7 %) (0.7 %) (0.8 %) (0.4 %)
Non-GAAP research and development expenses 16.3 % 16.1 % 16.3 %
16.8 % GAAP sales and marketing expenses 32.4 % 30.7 % 32.6
% 30.5 % Non-GAAP adjustment (0.4 %) (0.4 %) (0.4 %) (0.2 %)
Non-GAAP sales and marketing expenses 32.0 % 30.3 % 32.2 % 30.3 %
GAAP general and administrative expenses 18.2 % 20.8 % 19.4
% 21.0 % Non-GAAP adjustment (5.1 %) (5.3 %) (5.3 %) (5.3 %)
Non-GAAP general and administrative expenses 13.1 % 15.5 % 14.1 %
15.7 % GAAP operating loss (16.1 %) (19.3 %) (17.0 %) (19.2
%) Non-GAAP adjustment 9.4 % 10.1 % 9.5 % 9.6 % Non-GAAP operating
loss (6.7 %) (9.2 %) (7.5 %) (9.6 %) GAAP net loss (10.4 %)
(11.6 %) (11.5 %) (11.6 %) Non-GAAP adjustment 5.8 % 6.2 % 6.3 %
5.9 % Non-GAAP net loss (4.6 %) (5.4 %) (5.2 %) (5.7 %)
SECUREWORKS CORP. Reconciliation of GAAP to
Non-GAAP Financial Measures (in millions, except per share data)
(unaudited)
Low End of
Guidance High End of Guidance Three Months Ending
Full Year Ending Three Months Ending Full Year
Ending October 3, 2017 February 2, 2018
October 3, 2017 February 2, 2018 GAAP revenue
$ 115 $ 462 $ 116 $ 465 Impact of purchase accounting -
1 - 1 Non-GAAP
revenue $ 115 $ 463 $ 116 $ 466
GAAP net loss per share $ (0.19 ) $ (0.68 ) $ (0.17 ) $ (0.65 )
Amortization of intangibles 0.09 0.35 0.09 0.35 Impact of purchase
accounting 0.01 0.02 0.01 0.02 Stock-based compensation expense
0.05 0.19 0.05 0.19 Aggregate adjustment for income taxes
(0.05 ) (0.20 ) (0.05 ) (0.20 )
Non-GAAP net loss per share *
$ (0.10 ) $ (0.32 ) $ (0.09 ) $ (0.29 ) GAAP net loss $ (54
) $ (52 ) Interest and other, net 2 2 Income tax benefit (30 ) (29
) Depreciation and amortization 41 41 Stock-based compensation
expense 15 15 Impact of purchase accounting 2
2
Adjusted EBITDA *
$ (25 ) $ (21 )
* 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
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170906005330/en/
SecureWorksInvestor
Inquiries:Rebecca Gardy, 404-417-4803Investor Relations
Officerrgardy@secureworks.comorMedia
Inquiries:Elizabeth W. Clarke, 404-486-4492Director of
Media Relationseclarke@secureworks.com
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