Market Overview

SecureWorks Has Limited Upside, KeyBanc Says After Q4 Print

SecureWorks Has Limited Upside, KeyBanc Says After Q4 Print

SecureWorks Corp (NASDAQ: SCWX) achieved better-than-anticipated profitability in the fourth quarter, but revenue results reported Wednesday were mixed, and the company announced in-line revenue with disappointing EPS guidance, according to KeyBanc Capital Markets.

The Analyst

KeyBanc's Rob Owens maintains a Sector Weight rating on SecureWorks.

The Thesis

The company reported mixed fourth-quarter results. Revenue came in at $130.7 million, missing the $132.6-million estimate and representing a 1.8-percent sequential decline. Billings also came in short of expectations, Owens said in a Wednesday note. 

SecureWorks cited the timing of a large deal as the reason for missing expectations. It was was the second consecutive quarter in which the company recorded positive non-GAAP net income.

EPS of 2 cents beat the consensus estimate by a penny. 

Underlying customer metrics indicate some traction, the analyst said.

SecureWorks reported a sequential increase of $1 million in gross monthly recurring revenue following a dip in the previous quarter. The company said it had 16 deals that were seven figures and above; it also reported $103,000 in subscription revenue per customer, up 7 percent year-on-year.

New products and increased marketing investment should boost performance in 2020, Owens said. SecureWorks has guided to a decline in profitability next year, with plans to focus more resources on sales and marketing, he said. 

“Overall results remain somewhat uninspiring, especially given the strength of the current backdrop in terms of cyber awareness and spending environment." 

Price Action

SecureWorks shares were down 0.27 percent at $18.16 at the time of publication Thursday. 

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Latest Ratings for SCWX

Nov 2019Initiates Coverage OnSell
Dec 2018DowngradesOverweightEqual-Weight
Dec 2018DowngradesOutperformSector Perform

View More Analyst Ratings for SCWX
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Posted-In: KeyBanc Capital Markets Rob OwensAnalyst Color Earnings News Guidance Reiteration Analyst Ratings Best of Benzinga


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