Market Overview

SecureWorks Reports Third Quarter Fiscal 2017 Results; Raises Full Year Revenue and EPS Guidance

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ATLANTA--(BUSINESS WIRE)--

SecureWorks (NASDAQ: SCWX), a provider of intelligence-driven information security solutions, today announced its financial results for its third fiscal quarter, which ended October 28, 2016. The Company narrowed its operating loss in the third quarter as a result of continued demand for its subscription-based security solutions and continued scale in operating expenses.

"In the third quarter, SecureWorks delivered balanced growth across our client base," said Michael R. Cote, Chief Executive Officer of SecureWorks. "We continue to strategically invest in our core CTP and cloud technology to protect our clients against increasing cyber threats around the world. As the leading intelligence-driven provider of information security solutions, our opportunity to expand our client base is vast, and we are excited about the Company's future prospects."

A few recent business highlights include:

  • In September, the Company's senior executive leadership hosted its second annual European Global Client Forum in London to share its technology and innovation roadmap, and strengthen client engagement.
  • SecureWorks achieved AWS Advanced Partner status, the highest status an AWS Technology Partner can receive. This designation demonstrates the Company's continued commitment to bringing additional layers of security to clients seeking to embrace the power of AWS.
  • The Company expanded its service capabilities in Japan by offering its SaaS-based monitored firewall and web application firewall solutions on AWS, as well as monitored AWS EC2 server instances. SecureWorks also extended its Emergency Incident Response service on AWS to organizations in Japan.

Third Quarter Financial Results Highlights

  • Revenue in the third quarter increased 21.5 percent to $107.1 million from $88.2 million in the third quarter of fiscal 2016. Non-GAAP revenue increased 20.8 percent to $107.3 million, compared to $88.9 million in the third quarter of fiscal 2016.
  • Gross margin was 49.9 percent, up from 48.4 percent in the third quarter of fiscal 2016. Non-GAAP gross margin increased to 53.4 percent from 52.7 percent in the third quarter of fiscal 2016. The increase in GAAP and non-GAAP gross margins was due to strong revenue growth and continued scale in our operating model.
  • Operating loss for the quarter was $14.8 million; non-GAAP operating loss was $4.4 million.
  • Net loss per share was $0.10 as compared to a net loss per share of $0.26 in the third quarter of fiscal 2016; non-GAAP net loss per share was $0.02 as compared to a non-GAAP net loss per share of $0.18 in the third quarter of fiscal 2016.
  • The number of weighted average shares outstanding during the third quarter was approximately 80.0 million.
  • Net loss was $7.7 million, compared to a net loss of $18.5 in the third quarter of fiscal 2016; adjusted EBITDA was a loss of $1.8 million, compared to a loss of $12.1 million in the third quarter of fiscal 2016.
  • SecureWorks ended the third quarter with $110.8 million in cash and cash equivalents.
  • Monthly recurring revenue as of October 28, 2016 was $30.8 million, compared to $28.3 million as of October 30, 2015. The Company's monthly recurring revenue metric represents the monthly value of its subscription contracts, including operational backlog, as of a particular date.

Fourth Quarter and Full Year Fiscal 2017 Outlook

Based on the performance through the third quarter and current market conditions, the Company expects the following results for the fourth quarter and full fiscal year ending on February 3, 2017:

For the fourth fiscal quarter1, the Company expects:

  • Revenue, on both a GAAP and non-GAAP basis, to be in the range of $116 to $117 million.
  • Net loss per share to be in the range of $0.14 to $0.15 and non-GAAP net loss per share to be in the range of $0.05 to $0.07.
  • Approximately 80.009 million weighted average shares outstanding during the fourth quarter of fiscal 2017.

For fiscal year 20172, the Company expects the following results, updating previously announced guidance:

  • Revenue, on both a GAAP and non-GAAP basis, to be in the range of $427 to $428 million.
  • Net loss per share to be in the range of $0.55 to $0.56 and non-GAAP net loss per share to be in the range of $0.22 to $0.24.
  • Net loss to be in the range of $42 to $44 million, and adjusted EBITDA loss to be in the range of $21 to $23 million.
  • Approximately 77.635 million weighted average shares outstanding during fiscal year 2017.
  • Capital expenditures to be approximately $19 to $21 million for the full year.

___________________________
1 Due to rounding, the sum of the quarters may not add to the full year guidance.
2 The fourth quarter of fiscal 2017 will have 14 weeks versus the usual 13 weeks, as SecureWorks operates on a fiscal year of 52-53-weeks. The next fiscal year with 53 weeks will be the SecureWorks fiscal year 2023.

Conference Call Information

As previously announced, the Company will hold a conference call to discuss its third quarter performance on December 7, 2016, at 8:00 a.m. EDT. The conference call will be broadcast live over the Internet and can be accessed at http://investors.secureworks.com. For those unable to listen to the live broadcast, an archived version will be available at the same location until 5:00 p.m. EDT on January 7, 2017.

Non-GAAP Financial Measures

The press release presents information about the Company's non-GAAP revenue, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP research and development expenses, non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses, non-GAAP operating loss, non-GAAP net loss, non-GAAP net loss per share and adjusted EBITDA, which are non-GAAP financial measures provided as a supplement to the results provided in accordance with generally accepted accounting principles 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 measures 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 concerning its GAAP and non-GAAP revenue and GAAP and non-GAAP net loss per share for the fourth quarter and full year fiscal 2017, net loss and adjusted EBITDA loss for full year fiscal 2017, capital expenditures for full year fiscal 2017 and weighted average shares outstanding for the fourth quarter and full year fiscal 2017, which reflect the Company's current analysis of existing trends and information. These 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, including those relating to: 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 rapidly evolving market in which the Company operates; the Company's reliance on personnel with extensive information security expertise; fluctuations in the Company's quarterly results and other operating measures; intense competition in the Company's markets; the Company's ability to attract new clients, retain existing clients and increase its annual contract values; the Company's reliance on its largest client and on clients 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; the Company's service level agreements with clients requiring credits for service failures or inadequacies; the Company's ability to continue expansion of its sales force; the Company's long and unpredictable sales cycle; risks associated with the Company's international sales and operations; 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 ability of the Company's solutions to perform as intended; 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; the Company's recognition of revenue ratably over the terms of its managed security and threat intelligence contracts; the effect of timing differences between the expensing of sales commissions paid to the Company's strategic and distribution partners and the recognition of associated revenues; estimates or judgments relating to the Company's critical accounting policies; the Company's exposure to fluctuations in currency exchange rates; the effect of governmental export or import controls on the Company's business; the Company's compliance with the Foreign Corrupt Practices Act and similar laws; the Company's ability to maintain effective disclosure controls and procedures; the effect of natural disasters on the Company's ability to serve its clients; 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; and risks related to the Company's relationship with Dell Technologies Inc. and Dell Inc. and control of the Company by Dell Technologies Inc.

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 Company's quarterly report on Form 10-Q for the quarter ended April 29, 2016, as well as in the Company's other SEC filings, including the Company's quarterly report on Form 10-Q to be filed for the quarter ended October 28, 2016. 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 as a result of circumstances or events that arise after the date the statements are made, new information or otherwise.

About SecureWorks

SecureWorks is a leading global provider of intelligence-driven information security solutions exclusively focused on protecting our clients from cyberattacks. Our solutions enable organizations to fortify their cyber defenses to prevent security breaches, detect malicious activity in real time, prioritize and respond rapidly to security incidents and predict emerging threats. As of October 28, 2016, SecureWorks served over 4,300 clients across 58 countries. For more information, visit 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     Nine Months Ended
October 28,     October 30, October 28,     October 30,
2016 2015 2016 2015
Net revenue $ 107,108 $ 88,187 $ 310,554 $ 245,441
Cost of revenue   53,637     45,465     156,393     134,178  
Gross margin   53,471     42,722     154,161     111,263  
Research and development 12,181 12,230 38,625 36,703
Sales and marketing 26,424 27,109 82,559 75,924
General and administrative   29,709     28,228     86,867     82,160  
Total operating expenses   68,314     67,567     208,051     194,787  
Operating loss (14,843 ) (24,845 ) (53,890 ) (83,524 )
Interest and other, net   1,107     (5,724 )   2,323     (6,239 )
Loss before income taxes (13,736 ) (30,569 ) (51,567 ) (89,763 )
Income tax benefit   (6,018 )   (12,041 )   (20,171 )   (32,281 )
Net loss $ (7,718 ) $ (18,528 ) $ (31,396 ) $ (57,482 )

Net loss per common share (basic and diluted)

$ (0.10 ) $ (0.26 ) $ (0.41 ) $ (0.82 )

Weighted-average common shares outstanding (basic and diluted)

80,009 70,000 76,783 70,000
 

Percentage of Total Net Revenue

Gross margin 49.9 % 48.4 % 49.6 % 45.3 %
Research and development 11.4 % 13.9 % 12.4 % 15.0 %
Sales and marketing 24.7 % 30.7 % 26.6 % 30.9 %
General and administrative 27.7 % 32.0 % 28.0 % 33.5 %
Operating expenses 63.8 % 76.6 % 67.0 % 79.4 %
Operating loss (13.9 %) (28.2 %) (17.4 %) (34.0 %)
Loss before income taxes (12.8 %) (34.7 %) (16.6 %) (36.6 %)
Net loss (7.2 %) (21.0 %) (10.1 %) (23.4 %)
Effective tax rate 43.8 % 39.4 % 39.1 % 36.0 %
 
Note: Percentage growth rates are calculated based on underlying data in thousands
 
 
 
 
 
 
 
SECUREWORKS CORP.
Condensed Consolidated Statements of Financial Position
(in thousands)
(unaudited)
 
          October 28,     January 29,
2016 2016

Assets:

Current assets:
Cash and cash equivalents $ 110,835 $ 33,422
Accounts receivable, net 110,395 116,357
Inventories, net 2,720 3,549
Other current assets   24,539   26,211
Total current assets 248,489 179,539
Property and equipment, net 27,605 22,766
Goodwill 416,487 416,487
Purchased Intangible assets, net 268,855 289,657
Other non-current assets   24,340   9,336
Total assets $ 985,776 $ 917,785

Liabilities and Stockholders' Equity:

Current liabilities:
Accounts payable $ 23,222 $ 22,126
Accrued and other 44,974 60,407
Short-term deferred revenue 118,699 109,467
Short-term debt   -   27,993
Total current liabilities 186,895 219,993
Long-term deferred revenue 14,996 18,352
Other non-current liabilities   88,683   90,984
Total liabilities 290,574 329,329
Stockholders' equity   695,202   588,456
Total liabilities and stockholders' equity $ 985,776 $ 917,785
 
 
 
 
 
 
SECUREWORKS CORP.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
               
Nine Months Ended
October 28, October 30,
2016 2015
Cash flows from operating activities:
Net loss $ (31,396 ) $ (57,482 )
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization 29,248 30,704
Loss on disposal of assets - 157
Change in fair value of convertible notes 132 5,493
Stock-based compensation expense 6,389 628

Effects of exchange rate changes on monetary assets and liabilities denominated in foreign currencies

(2,180 ) 559
Income tax benefit (20,171 ) (32,281 )
Other non-cash impacts - 5,538
Provision for doubtful accounts 1,994 2,948
Excess tax benefit from share-based payment (221 ) -
Changes in assets and liabilities:
Accounts receivable 6,148 (16,015 )
Due to/from parent (20,027 ) 3,260
Inventories 829 (2,053 )
Other assets 1,529 (8,420 )
Accounts payable 1,096 (945 )
Deferred revenue 5,876 14,666
Accrued and other liabilities   2,080     47,048  
Net cash used in operating activities (18,674 ) (6,195 )
Cash flows from investing activities:
Capital expenditures   (13,285 )   (7,007 )
Net cash used in investing activities   (13,285 )   (7,007 )
Cash flows from financing activities:
Proceeds from IPO, net 99,604 -
Capital contribution from parent, net 9,547 -
Excess tax benefit from share-based payment 221 -
Transfers from parent, net - 24,383
Payments of deferred offering costs - (899 )
Issuance of convertible notes   -     22,500  
Net cash provided by financing activities 109,372 45,984
Net increase in cash and cash equivalents 77,413 32,782
Cash and cash equivalents at beginning of the period   33,422     6,669  
Cash and cash equivalents at end of the period $ 110,835   $ 39,451  
 
Supplemental disclosure of non-cash financing activities:
Conversion of convertible notes to common stock $ 28,125   $ -  
 
 
 
 
 
 

Non-GAAP Financial Measures

This press release presents information about the Company's non-GAAP revenue, non-GAAP gross margin, non-GAAP research and development expenses, non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses, non-GAAP operating loss, non-GAAP net loss, non-GAAP net loss per share and adjusted EBITDA, which are non-GAAP financial measures provided as a supplement to the results provided in accordance with GAAP. The Company believes these non-GAAP financial measures provide useful information to help evaluate its operating results by facilitating an enhanced understanding of its operating performance and enabling more meaningful period-to-period comparisons. There are limitations to the use of the non-GAAP financial measures presented in the press release. These non-GAAP financial measures may not be comparable to similarly titled measures of other companies. Other companies, including companies in SecureWorks' industry, may calculate non-GAAP financial measures differently than the Company does, limiting the usefulness of those measures for comparative purposes.

A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure is provided below for each of the periods indicated.

The Company excludes the following items from one or more of its non-GAAP financial measures:

Impact of purchase accounting. The impact of purchase accounting consists primarily of purchase accounting adjustments related to a change in the basis of deferred revenue for the going-private transaction of Dell Inc. ("Dell"), an indirect parent of the Company, that was completed on October 29, 2013, as well as Dell's acquisition of the Company in February 2011. The Company believes it is useful to exclude such purchase accounting adjustments related to the foregoing transactions as this deferred revenue generally results from multi-year service contracts under which deferred revenue is established upon sale and revenue is recognized over the term of the contract. Pursuant to the fair value provisions applicable to the accounting for business combinations, GAAP requires this deferred revenue to be recorded at its fair value, which is typically less than the book value. In presenting non-GAAP earnings, the Company adds back the reduction in revenue that results from this revaluation on the expectation that a significant majority of these service contracts will be renewed in the future and therefore the revaluation is not helpful in predicting its ongoing revenue trends. The Company believes that this non-GAAP financial adjustment is useful to investors because it allows investors to (1) evaluate the effectiveness of the methodology and information used by management in its financial and operational decision-making, and (2) compare past and future reports of SecureWorks' financial results, as the revenue reduction related to acquired deferred revenue will not recur when related service contracts are renewed in future periods.

Amortization of intangible assets. Amortization of intangible assets consists of amortization of customer relationships and acquired technology. In connection with Dell's going-private transaction and Dell's acquisition of the Company in February 2011, all of the Company's tangible and intangible assets and liabilities were accounted for and recognized at fair value on the transaction date. Accordingly, for periods after October 29, 2013, amortization of intangible assets consists of amortization associated with intangible assets recognized in connection with Dell's going-private transaction. For periods prior to October 29, 2013, amortization of intangible assets consists of amortization associated with purchased intangible assets recognized in connection with Dell's acquisition of the Company.

Stock-based compensation. Non-cash stock-based compensation relates to awards under both the Dell Technologies and SecureWorks equity plans. We exclude such expenses when assessing the effectiveness of our operating performance since they do not necessarily correlate with the underlying operating performance of the business.

Other expenses. Other expenses include professional fees incurred by the Company in connection with the Company's initial public offering and amounts expensed in the settlement of a legal matter. The Company excludes these expenses for the purpose of calculating the non-GAAP financial measures because it believes these items are outside the ordinary course of business and do not contribute to a meaningful evaluation of its current operating performance or comparisons to its past operating performance.

Aggregate adjustment for income taxes. The aggregate adjustment for income taxes is the estimated combined income tax effect for the adjustments mentioned above. The tax effects are determined based on the tax jurisdictions where the above items were incurred.

As the excluded items can have a material impact on earnings, management compensates for this limitation by relying primarily on GAAP results and using non-GAAP financial measures supplementally. The non-GAAP financial measures are not meant to be considered as indicators of performance in isolation from or as a substitute for revenue, gross margin, research and development expenses, sales and marketing expenses, general and administrative expenses, operating loss or net loss prepared in accordance with GAAP, and should be read only in conjunction with financial information presented on a GAAP basis.

(Tables Follow)

 
 
 
 
 
SECUREWORKS CORP.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands, except per share data)
(unaudited)
 
          Three Months Ended     Nine Months Ended
October 28,     October 30, October 28,     October 30,
2016 2015 2016 2015
GAAP revenue $ 107,108 $ 88,187 $ 310,554 $ 245,441
Impact of purchase accounting   221     692     663     2,077  
Non-GAAP revenue $ 107,329   $ 88,879   $ 311,217   $ 247,518  
 
GAAP gross margin $ 53,471 $ 42,722 $ 154,161 $ 111,263
Amortization of intangibles 3,410 3,410 10,231 10,230
Impact of purchase accounting 271 733 888 2,199
Stock-based compensation expense 157 - 332 -
Other   -     -     -     4,868  
Non-GAAP gross margin $ 57,309   $ 46,865   $ 165,612   $ 128,560  
 
GAAP research and development expenses $ 12,181 $ 12,230 $ 38,625 $ 36,703
Stock-based compensation expense   (692 )   (70 )   (1,462 )   (206 )
Non-GAAP research and development expenses $ 11,489   $ 12,160   $ 37,163   $ 36,497  
 
GAAP sales and marketing expenses $ 26,424 $ 27,109 $ 82,559 $ 75,924
Stock-based compensation expense   (363 )   -     (768 )   -  
Non-GAAP sales and marketing expenses $ 26,061   $ 27,109   $ 81,791   $ 75,924  
 
GAAP general and administrative expenses $ 29,709 $ 28,228 $ 86,867 $ 82,160
Amortization of intangibles (3,524 ) (3,524 ) (10,571 ) (11,136 )
Impact of purchase accounting (240 ) (229 ) (646 ) (688 )
Stock-based compensation expense (1,812 ) (144 ) (3,827 ) (422 )
Other   -     (1,847 )   (1,164 )   (8,381 )
Non-GAAP general and administrative expenses $ 24,133   $ 22,484   $ 70,659   $ 61,533  
 
GAAP operating loss $ (14,843 ) $ (24,845 ) $ (53,890 ) $ (83,524 )
Amortization of intangibles 6,934 6,934 20,802 21,367
Impact of purchase accounting 511 962 1,534 2,886
Stock-based compensation expense 3,024 214 6,389 628
Other   -     1,847     1,164     13,249  
Non-GAAP operating loss $ (4,374 ) $ (14,888 ) $ (24,001 ) $ (45,394 )
 
GAAP net loss $ (7,718 ) $ (18,528 ) $ (31,396 ) $ (57,482 )
Amortization of intangibles 6,934 6,934 20,802 21,367
Impact of purchase accounting 511 962 1,534 2,886
Stock-based compensation expense 3,024 214 6,389 628
Other - 1,847 1,164 13,249
Aggregate adjustment for income taxes   (3,990 )   (3,809 )   (11,409 )   (14,582 )
Non-GAAP net loss $ (1,239 ) $ (12,380 ) $ (12,916 ) $ (33,934 )
 
GAAP net loss per share $ (0.10 ) $ (0.26 ) $ (0.41 ) $ (0.82 )
Amortization of intangibles 0.09 0.10 0.27 0.31
Impact of purchase accounting 0.01 0.01 0.02 0.04
Stock-based compensation expense 0.04 - 0.08 0.01
Other - 0.03 0.02 0.19
Aggregate adjustment for income taxes   (0.05 )   (0.05 )   (0.15 )   (0.21 )
Non-GAAP net loss per share * $ (0.02 ) $ (0.18 ) $ (0.17 ) $ (0.48 )
 
* Sum of reconciling items may differ from total due to rounding of individual components
 
GAAP net loss $ (7,718 ) $ (18,528 ) $ (31,396 ) $ (57,482 )
Interest and other, net (1,107 ) 5,724 (2,323 ) 6,239
Income tax benefit (6,018 ) (12,041 ) (20,171 ) (32,281 )
Depreciation and amortization 9,826 9,982 29,248 30,703
Stock-based compensation expense 3,024 214 6,389 628
Impact of purchase accounting 221 692 663 2,077
Other   -     1,847     1,164     13,249  
Adjusted EBITDA $ (1,772 ) $ (12,110 ) $ (16,426 ) $ (36,867 )
 
 
 
 
 
 
SECUREWORKS CORP.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands)
(unaudited)
 
          Three Months Ended   Nine Months Ended
October 28,   October 30, October 28,   October 30,
2016 2015 2016 2015

Percentage of Total Net Revenue

GAAP gross margin 49.9 % 48.4 % 49.6 % 45.3 %
Non-GAAP adjustment 3.5 % 4.3 % 3.6 % 6.6 %
Non-GAAP gross margin 53.4 % 52.7 % 53.2 % 51.9 %
 
GAAP research and development expenses 11.4 % 13.9 % 12.4 % 15.0 %
Non-GAAP adjustment (0.7 %) (0.2 %) (0.5 %) (0.3 %)
Non-GAAP research and development expenses 10.7 % 13.7 % 11.9 % 14.7 %
 
GAAP sales and marketing expenses 24.7 % 30.7 % 26.6 % 30.9 %
Non-GAAP adjustment (0.4 %) (0.2 %) (0.3 %) (0.2 %)
Non-GAAP sales and marketing expenses 24.3 % 30.5 % 26.3 % 30.7 %
 
GAAP general and administrative expenses 27.7 % 32.0 % 28.0 % 33.5 %
Non-GAAP adjustment (5.2 %) (6.7 %) (5.3 %) (8.6 %)
Non-GAAP general and administrative expenses 22.5 % 25.3 % 22.7 % 24.9 %
 
GAAP operating loss (13.9 %) (28.2 %) (17.4 %) (34.0 %)
Non-GAAP adjustment 9.8 % 11.4 % 9.7 % 15.7 %
Non-GAAP operating loss (4.1 %) (16.8 %) (7.7 %) (18.3 %)
 
GAAP net loss (7.2 %) (21.0 %) (10.1 %) (23.4 %)
Non-GAAP adjustment 6.0 % 7.1 % 5.9 % 9.7 %
Non-GAAP net loss (1.2 %) (13.9 %) (4.2 %) (13.7 %)
 
 
 
 
 
 
SECUREWORKS CORP.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in millions, except per share data)
(unaudited)
 
          Low End of Guidance     High End of Guidance
Three Months Ending     Full Year Ending Three Months Ending     Full Year Ending
February 3, 2017 February 3, 2017   February 3, 2017 February 3, 2017
 
GAAP revenue $ 116 $ 426 $ 117 $ 427
Impact of purchase accounting   -     1     -     1  
Non-GAAP revenue $ 116   $ 427   $ 117   $ 428  
 
GAAP net loss per share $ (0.15 ) $ (0.56 ) $ (0.14 ) $ (0.55 )
Amortization of intangibles 0.09 0.36 0.09 0.36
Impact of purchase accounting 0.01 0.03 0.01 0.03
Stock-based compensation expense 0.04 0.13 0.04 0.13
Other - 0.01 - 0.01
Aggregate adjustment for income taxes   (0.06 )   (0.21 )   (0.05 )   (0.20 )
Non-GAAP net loss per share $ (0.07 ) $ (0.24 ) $ (0.05 ) $ (0.22 )
 
GAAP net loss $ (44 ) $ (42 )
Interest and other, net (3 ) (3 )
Income tax benefit (27 ) (27 )
Depreciation and amortization 40 40
Stock-based compensation expense 9 9
Impact of purchase accounting 1 1
Other   1     1  
Adjusted EBITDA $ (23 ) $ (21 )
 
* Sum of quarterly guidance may differ from full year guidance due to rounding
 
 
 
 

SecureWorks
Investor Inquiries:
Rebecca Gardy, 404-417-4803
Investor Relations Officer
rgardy@secureworks.com
or
Media Inquiries:
Elizabeth W. Clarke, 404-486-4492
Director of Media Relations
eclarke@secureworks.com

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