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.

www.secureworks.com (PRNewsfoto/SecureWorks, Inc.)

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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SOURCE Secureworks, Inc.

Copyright 2023 PR Newswire

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