SecureWorks Corp is a cybersecurity provider of technology-driven solutions singularly focused on protecting its customers by outpacing and outmaneuvering the adversary. The company offers its customers the following services; software-as-a-service, or SaaS, solutions, managed solutions, and professional services, including incident response and adversarial services. Its solutions enable organizations to fortify their cyber defenses to prevent security breaches, detect malicious activity in real-time, prioritize and respond to security incidents, and predict emerging threats. The company's products consist of MDR, XDR, Threat Hunting, Log Management, NGAV, EDR, IDPS.
Performance and Challenges
SecureWorks Corp (SCWX, Financial) reported total revenue of $82.2 million for Q2 FY25, a decline from $93.0 million in the same period last year. This decrease reflects the strategic wind-down of its legacy Other MSS business, which was completed at the end of Q1 FY25. Despite this, Taegis™ revenue grew 7% year-over-year to $71.2 million, showcasing the company's focus on its core cybersecurity platform.
Challenges remain as the company navigates the transition from legacy services to its Taegis platform. The total annual recurring revenue (ARR) grew to $290 million, a 5% increase year-over-year, indicating a steady shift towards more sustainable revenue streams.
Financial Achievements
SecureWorks Corp (SCWX, Financial) achieved significant milestones in its financial performance. The GAAP gross margin for Taegis expanded to 71.8%, up from 68.8% in the same period last year, while the non-GAAP gross margin reached 74.3%, compared to 70.7% previously. This improvement underscores the efficiency gains from the company's ongoing use of automation, AI, and scalable cloud architecture.
Income Statement Highlights
Key details from the income statement include:
| Metric | Q2 FY25 | Q2 FY24 |
|---|---|---|
| Total Revenue | $82.2 million | $93.0 million |
| GAAP Gross Profit | $54.7 million | $52.9 million |
| Non-GAAP Gross Profit | $56.9 million | $58.0 million |
| GAAP Net Loss | $14.7 million | $32.4 million |
| Non-GAAP Net Loss | $0.4 million | $8.6 million |
Balance Sheet and Cash Flow
SecureWorks Corp (SCWX, Financial) ended the second quarter with $47.6 million in cash and cash equivalents and no borrowings on its credit facility. This strong liquidity position is crucial for the company as it continues to invest in its Taegis platform and other strategic initiatives.
Commentary and Analysis
“In a world where we rely on technology, comprehensive cyber resilience is more top of mind than ever, and our open, AI-powered platform has proven itself to be the shield that keeps companies safely up and running. This quarter we continued to innovate and invest in the extensibility of Taegis, with the launch of Taegis Identity Threat Detection and Response enabling organizations to proactively combat identity threats,” said Wendy Thomas, CEO, Secureworks.
“Our second quarter results demonstrate the sustainability of our Taegis gross margin expansion, reflecting further efficiencies gained from our ongoing use of automation, AI, and scalable cloud architecture, giving us confidence in our continued positive adjusted EBITDA trajectory,” said Alpana Wegner, Chief Financial Officer, Secureworks.
Business and Operational Highlights
SecureWorks Corp (SCWX, Financial) introduced new solutions such as the Identity Threat Detection and Response (ITDR) solution, Taegis IDR, and Taegis ManagedXDR Plus. These innovations are designed to enhance cyber resiliency and compliance with regulatory requirements. The company also expanded its Global MSSP Partner Program and received several industry recognitions, including the Gold in the 16th Annual 2024 Golden Bridge Awards® for AI in Cybersecurity Innovation.
Financial Outlook
For the third quarter of fiscal 2025, SecureWorks Corp (SCWX, Financial) expects revenue between $80 million and $82 million, adjusted EBITDA of $0 to $2 million, and non-GAAP net earnings per share of ($0.01) to $0.01. For the full fiscal year 2025, the company anticipates total revenue between $328 million and $335 million, non-GAAP net income of $3 million to $8 million, and adjusted EBITDA of $6 million to $12 million.
For more detailed insights and the full earnings report, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from SecureWorks Corp for further details.
