September 30, 2022

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SecureWorks shares drop on revenue miss and weak outlook

2 min read

Shares in cybersecurity firm Secureworks Corp. dropped in regular trading today after the company missed on revenue and predicted a weaker-than-expected outlook for the next quarter.

For the quarter ended Jan. 28, Secureworks reported a profit before costs such as stock compensation of $ 2.6 million, or three cents per share, compared with an adjusted profit of $ 300,000 or about breakeven per share, in the same quarter of last year. Revenue fell 8.5% to $ 127.9 million. Analysts had expected revenue of $ 131.3 million and a loss of eight cents per share.

Highlights in the quarter included Secureworks Taegis, the company’s cloud-native extended detection and response service, growing to $ 165 million in annual recurring revenue, an increase of 34% over the previous quarter and up 200% year-over-year. Secureworks ended the quarter with 1,200 Taegis customers, up 400 from the last quarter.

Both net and adjusted gross margins rose to record highs of 60.5% and 64.1%, respectively.

“With the first true XDR solution, Secureworks Taegis has one of the fastest XDR customer and ARR growth rates in the market due to superior outcomes and ROIs we’re delivering customers,” Wendy Thomas, chief executive officer of Secureworks, said in a statement. “Just two and a half years after launch, Taegis reached $ 165 million in ARR – a remarkable accomplishment.”

For the full fiscal year 2022, SecureWorks reported an adjusted profit of $ 8.7 million, or 11 cents per share, compared to $ 17.9 million or 22 cents per share in the previous year. Revenue came in at $ 535.2 million, down nearly 5% year-over-year.

The revenue drop reflects the company’s move away from its legacy systems to its Taegis cloud XDR service and it’s a point the company continues to make. Over the full fiscal year, Taegis revenue grew 167% to $ 85.6 million.

For the quarter ahead, SecureWorks predicted an adjusted loss per share of 14 to 15 cents on revenue of $ 120 million to $ 122 million. Analysts had predicted a loss of five cents per share on revenue of $ 131.3 million.

Investors didn’t like the miss in both revenue and outlook. SecureWorks’ share price fell almost 12% today.

Image: Secureworks

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