On June 6, 2024, SecureWorks Corp (SCWX, Financial) released its 8-K filing detailing the financial results for its first quarter of fiscal 2025, which ended on May 3, 2024. SecureWorks Corp, a global leader in cybersecurity, focuses on protecting its customers through technology-driven solutions, including software-as-a-service (SaaS), managed solutions, and professional services.
Performance Overview
SecureWorks Corp reported total revenue of $85.7 million for the first quarter, surpassing the analyst estimate of $84.20 million. This figure, however, represents a decline from the $94.4 million reported in the same quarter of the previous fiscal year, primarily due to the strategic wind-down of the company's legacy Other MSS business.
Despite the overall revenue decline, the company's Taegis™ platform showed robust growth. Taegis revenue for the quarter was $69.1 million, a 10% increase year-over-year, and its annual recurring revenue (ARR) grew by 7% to $287 million. The GAAP gross margin for Taegis also improved, reaching 71.9%, up from 68.2% in the previous year.
Financial Achievements and Challenges
SecureWorks Corp's GAAP gross profit for the quarter was $57.8 million, compared to $51.6 million in the same period last year. Non-GAAP gross profit also increased to $59.9 million from $56.6 million. The company's GAAP net loss widened to $36.1 million, or $0.41 per share, from $31.0 million, or $0.36 per share, in the previous year. This loss was significantly impacted by a $26.2 million valuation allowance due to tax deconsolidation from Dell Technologies Inc.
On a positive note, SecureWorks Corp reported a non-GAAP net income of $4.2 million, or $0.05 per share, compared to a non-GAAP net loss of $17.1 million, or $0.20 per share, in the same period last year. Adjusted EBITDA for the quarter was $5.6 million, representing an adjusted EBITDA margin of 6.6%, a significant improvement from the adjusted EBITDA loss of $20.1 million in the first quarter of fiscal 2024.
Key Metrics and Financial Statements
| Metric | Q1 FY2025 | Q1 FY2024 |
|---|---|---|
| Total Revenue | $85.7 million | $94.4 million |
| Taegis Revenue | $69.1 million | $62.6 million |
| GAAP Gross Profit | $57.8 million | $51.6 million |
| Non-GAAP Gross Profit | $59.9 million | $56.6 million |
| GAAP Net Loss | $(36.1) million | $(31.0) million |
| Non-GAAP Net Income | $4.2 million | $(17.1) million |
| Adjusted EBITDA | $5.6 million | $(20.1) million |
Business and Operational Highlights
SecureWorks Corp launched several new product capabilities during the quarter, including Taegis Network Detection and Response (NDR), which leverages AI to uncover hidden threats. The company also expanded its Global MSSP Partner Program by adding Softbank Corp. and entered into an incident response partnership with Tokio Marine & Nichido Fire Insurance Co., Ltd.
“This quarter, we launched new product capabilities targeting high-risk attack vectors and added two high-profile partners in Japan as we expand our Global Partner program,” said Wendy Thomas, CEO, SecureWorks.
Financial Outlook
For the second quarter of fiscal 2025, SecureWorks Corp expects revenue between $80 million and $82 million, adjusted EBITDA of $1 million to $3 million, and non-GAAP net earnings per share of $0.00 to $0.02. For the full fiscal year 2025, the company anticipates total revenue between $325 million and $335 million, non-GAAP net income of $4 million to $10 million, and adjusted EBITDA of $6 million to $12 million.
SecureWorks Corp's strategic focus on its Taegis platform and operational efficiencies driven by AI and cloud architecture are expected to continue driving growth and improving margins. Investors and stakeholders can access the full earnings report and additional details on the company's website.
Explore the complete 8-K earnings release (here) from SecureWorks Corp for further details.
