Market Overview

Secureworks Reports Record Second Quarter Fiscal 2019 Results

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Second Quarter Fiscal 2019 Highlights

  • Revenue grew 10.8 percent over fiscal 2018 to $128.8 million,
    including 50 percent growth year-over-year internationally.
  • Monthly recurring revenue increased 12 percent year-over-year to
    $36.2 million.
  • Net loss of $0.12 per share and non-GAAP net loss per share of
    $0.01 were better than expectations and Adjusted EBITDA was $1.0
    million.
  • Cash flow provided by operating activities was $29.3 million.

Secureworks (NASDAQ:SCWX), a leading global cybersecurity company that
protects organizations in the digitally connected world, today announced
financial results for its second quarter ended August 3, 2018.

"The global demand for cybersecurity solutions has never been greater
and as a recognized industry leader, we continue to bring technology-led
solutions that leverage our unique threat intelligence to provide
measureable outcomes to help protect our clients," said Michael R. Cote,
Chief Executive Officer of Secureworks.

"We had a strong second quarter, finishing with MRR growth of 12% and
improving operating leverage, as we continue to gain sales momentum. I
am pleased with our progress and remain excited about the significant
opportunity for further growth and productivity gains as we continue to
execute against our objectives," continued Mr. Cote.

Business and operational developments for the second quarter of fiscal
2019 include:

  • Total value of closed deals in the second quarter increased 37 percent
    year over year and the total value of closed deals greater than $1
    million increased 30 percent over the second quarter of fiscal 2018.
  • The Company was recently recognized by the respected industry analyst
    firm Forrester.
    • The Forrester Wave™: Global Managed Security Services (MSSPs), Q3
      20181 report recognized Secureworks as a leader, based
      on a comprehensive set of evaluation criteria, including current
      offerings, strategy and market presence.
    • Forrester's Now Tech: Managed Detection and Response (MDR)
      Services, Q2 20182 report recognized Secureworks as one
      of only two large providers with full forensics capabilities.
  • International revenue increased 50 percent year over year, including
    53 percent in Japan. The Company was recently recognized as a leader
    in the IDC MarketScape: Asia/Pacific Threat Lifecycle Services 2018
    Vendor Assessment3.
  • The Company recently launched its Red CloakTM Partner
    Program, working with industry leading solution providers, making the
    Company's proprietary brand of behavioral analytics and high-fidelity
    visibility more broadly available in the marketplace. This
    collaboration will generate the necessary level of telemetry to apply
    Red Cloak analytics effectively, regardless of which endpoint
    detection and response solution exists within the client environment.

____________________
1 The Forrester Wave™: Global
Managed Security Services Providers (MSSPs), Q3 2018, Forrester
Research, Inc., August 20, 2018
2 Now Tech: Managed
Detection And Response (MDR) Services, Q2 2018, Forrester Research,
Inc., April 26, 2018
3 IDC MarketScape: Asia/Pacific
Threat Lifecycle Services 2018 Vendor Assessment, July 2018, IDC
#AP43699718

Second Quarter Fiscal 2019 Financial Results Highlights

  • GAAP revenue increased 10.8 percent to $128.8 million in the second
    quarter of fiscal 2019, from $116.2 million in the same period last
    year. Non-GAAP revenue increased 10.6 percent to $128.8 million from
    $116.4 million in the second quarter of fiscal 2018.
  • GAAP gross margin was 51.4 percent in the second quarter of 2019,
    compared with 51.9 percent in the same period last year. Non-GAAP
    gross margin was 54.3 percent compared with 55.1 percent in the second
    quarter of fiscal 2018.
  • GAAP net loss was $9.8 million, or $0.12 per share, in the second
    quarter of fiscal 2019, compared with a GAAP net loss of $10.3
    million, or $0.13 per share, in the prior year. Non-GAAP net loss was
    $0.9 million, or $0.01 per share, in the second quarter of fiscal
    2019, compared with a non-GAAP net loss of $3.5 million, or $0.04 per
    share, in the same prior year period.
  • Adjusted EBITDA was $1.0 million, compared with an adjusted EBITDA
    loss of $1.8 million in the second quarter of fiscal 2018.
  • Cash provided by operating activities for the three months ended
    August 3, 2018 was $29.3 million.
  • Secureworks ended the second quarter of fiscal 2019 with $103.3
    million in cash and cash equivalents.
  • Monthly recurring revenue as of August 3, 2018 increased 12.0 percent
    to $36.2 million from $32.3 million as of August 4, 2017. The
    Company's monthly recurring revenue metric represents the monthly
    value of its subscription contracts, including operational backlog, as
    of period end.

Third Quarter and Full Fiscal Year 2019 Guidance

For the third quarter of fiscal 2019, the Company expects:

  • Revenue of $130 to $131 million on both a GAAP and non-GAAP basis.
  • GAAP net loss per share of $0.16 to $0.17 and non-GAAP net loss per
    share of $0.05 to $0.06, including approximately $0.02 per share of
    reorganization costs.

Based on second quarter fiscal 2019 performance and current business
trends, the Company has updated its guidance for the full fiscal year
2019. The Company now expects:

  • GAAP and non-GAAP revenue of $518 to $520 million.
  • GAAP net loss of $48 to $50 million and $0.59 to $0.61 on a per share
    basis.
  • Non-GAAP net loss per share of $0.15 to $0.17.
  • Adjusted EBITDA loss of $3 to $5 million.
  • Monthly recurring revenue of $37.0 to $39.0 million, at the end of the
    fourth quarter of fiscal 2019.
  • Cash flow from operations of $35 to $40 million.

Conference Call Information

As previously announced, the Company will hold a conference call to
discuss its fiscal 2019 second quarter and outlook for its third quarter
and fiscal year 2019 on September 5, 2018, at 8:00 a.m. ET. A live audio
webcast of the conference call and the supplemental financial
information referred to above will be accessible on the Company's
website at http://investors.secureworks.com.
The webcast and supplemental information will be archived at the same
location for one year.

Non-GAAP Financial Measures

The 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 accounting principles generally accepted 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
measure 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 third quarter of fiscal 2019 and for
full year fiscal 2019, net loss and adjusted EBITDA loss for full year
fiscal 2019, capital expenditures and effective tax rate for full year
fiscal 2019, weighted average shares outstanding during the third
quarter of fiscal 2019 and full year fiscal 2019, monthly recurring
revenue at the end of the fourth quarter of fiscal 2019, and cash flow
from operations for full year fiscal 2019, all of which reflect the
Company's current analysis of existing trends and information. These
forward-looking 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 cycles; 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 interoperate with its clients' IT infrastructure; 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; risks associated with the Company's acquisition of other
businesses; 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 and other catastrophic events 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
the Company's annual report on Form 10-K for the fiscal year ended
February 2, 2018, as well as in the Company's other SEC filings. 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® (NASDAQ:SCWX) is a leading global cybersecurity company
that protects organizations in the digitally connected world. We combine
visibility from thousands of clients, machine learning and automation
from our industry-leading Secureworks Counter Threat Platform™, and
actionable insights from our team of elite researchers, analysts and
consultants to create a powerful network effect that provides
increasingly strong protection for our clients. By aggregating and
analyzing data from any source, anywhere, we prevent security breaches,
detect malicious activity in real time, respond rapidly, and predict
emerging threats. We offer our clients a cyber-defense that is
Collectively Smarter. Exponentially Safer.™ 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   Six Months Ended

August 3,

2018

August 4,

2017*

 

August 3,

2018

August 4,

2017*

Net revenue $ 128,778 $ 116,240 $ 254,939 $ 229,918
Cost of revenue 62,548   55,907     123,078   109,520  
Gross margin 66,230   60,333     131,861   120,398  
Research and development 22,453 19,693 44,807 39,172
Sales and marketing 35,521 35,433 71,191 71,611
General and administrative 22,419   21,138     47,616   44,542  
Total operating expenses 80,393   76,264     163,614   155,325  
Operating loss (14,163 ) (15,931 ) (31,753 ) (34,927 )
Interest and other, net 1,003   (420 )   1,508   (1,069 )
Loss before income taxes (13,160 ) (16,351 ) (30,245 ) (35,996 )
Income tax benefit (3,391 ) (6,080 )   (6,657 ) (12,448 )
Net loss $ (9,769 ) $ (10,271 )   $ (23,588 ) $ (23,548 )
 
Net loss per common share (basic and diluted) $ (0.12 ) $ (0.13 )   $ (0.29 ) $ (0.29 )

Weighted-average common shares outstanding (basic and diluted)

80,839   80,353     80,680   80,205  
 

Percentage of Total Net Revenue

Gross margin 51.4 % 51.9 % 51.7 % 52.4 %
Research and development 17.4 % 16.9 % 17.6 % 17.0 %
Sales and marketing 27.6 % 30.5 % 27.9 % 31.1 %
General and administrative 17.4 % 18.2 % 18.7 % 19.4 %
Operating expenses 62.4 % 65.6 % 64.2 % 67.6 %
Operating loss (11.0 )% (13.7 )% (12.5 )% (15.2 )%
Loss before income taxes (10.2 )% (14.1 )% (11.9 )% (15.7 )%
Net loss (7.6 )% (8.8 )% (9.3 )% (10.2 )%
Effective tax rate 25.8 % 37.2 % 22.0 % 34.6 %
 
Note: Percentage growth rates are calculated based on underlying
data in thousands
 

* Certain prior period amounts have been adjusted as a result of
the adoption of the accounting standard for revenue recognition
set forth in ASC 606.

 
 
SECUREWORKS CORP.
Condensed Consolidated Statements of Financial Position
(in thousands)
(unaudited)
           

August 3,

2018

February 2,

2018*

Assets:

Current assets:
Cash and cash equivalents $ 103,316 $ 101,539
Accounts receivable, net 133,344 157,764
Inventories, net 623 1,030
Other current assets 40,814   40,551
Total current assets 278,097 300,884
Property and equipment, net 32,611 33,457
Goodwill 416,487 416,487
Purchased intangible assets, net 220,316 234,184
Other non-current assets 79,638   72,069
Total assets $ 1,027,149   $ 1,057,081

Liabilities and Stockholders' Equity:

Current liabilities:
Accounts payable $ 21,417 $ 23,266
Accrued and other 65,321 81,625
Short-term deferred revenue 151,828   137,697
Total current liabilities 238,566 242,588
Long-term deferred revenue 13,435 14,948
Other non-current liabilities 62,878   68,455
Total liabilities 314,879 325,991
Stockholders' equity 712,270   731,090
Total liabilities and stockholders' equity $ 1,027,149   $ 1,057,081
 

* Certain prior period amounts have been adjusted as a result of
the adoption of the accounting standard for revenue recognition
set forth in ASC 606.

 
 
SECUREWORKS CORP.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
       
Six Months Ended
August 3, 2018 August 4, 2017*
Cash flows from operating activities:
Net loss $ (23,588 ) $ (23,548 )
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities
Depreciation and amortization 20,512 20,666
Stock-based compensation expense 9,642 7,158
Effects of exchange rate changes on monetary assets and liabilities
denominated in foreign currencies
(1,275 ) 1,449
Income tax benefit (6,657 ) (12,448 )
Provision for doubtful accounts 1,571 2,591
Changes in assets and liabilities:
Accounts receivable 22,542 (12,491 )
Due to/from parent (1,334 ) 7,653
Inventories 407 778
Other assets (5,162 ) (4,014 )
Accounts payable (1,392 ) 428
Deferred revenue 12,240 13,617
Accrued and other liabilities (16,620 ) (10,254 )
Net cash provided by (used in) operating activities 10,886 (8,415 )
Cash flows from investing activities:
Capital expenditures (5,366 ) (8,376 )
Net cash provided by (used in) investing activities (5,366 ) (8,376 )
Cash flows from financing activities:
Principal payments on financing arrangement with Dell Financial
Services
(1,104 ) (800 )
Taxes paid on vested restricted shares (2,139 ) (1,224 )
Other financing activities (500 )  
Net cash provided by (used in) financing activities (3,743 ) (2,024 )
Net increase (decrease) in cash and cash equivalents 1,777 (18,815 )
Cash and cash equivalents at beginning of the period 101,539   116,595  
Cash and cash equivalents at end of the period $ 103,316   $ 97,780  
 

* Certain prior period amounts have been adjusted as a result of
the adoption of the accounting standard for revenue recognition
set forth in ASC 606.

 
 

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. Investors are encouraged to review the
reconciliations in conjunction with the presentation of the non-GAAP
financial measures for each of the periods presented. In future fiscal
periods, the Company may exclude such items and may incur income and
expenses similar to these excluded items. Accordingly, the exclusion of
these items and other similar items in this non-GAAP presentation should
not be interpreted as implying that these items are non-recurring,
infrequent or unusual.

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 acquisition of Dell Inc.
("Dell") by Dell Technologies Inc. in fiscal 2014.

Amortization of intangible assets. Amortization of intangible
assets consists of amortization of customer relationships and acquired
technology. In connection with the acquisition of Dell by Dell
Technologies Inc. in fiscal 2014, all of the Company's tangible and
intangible assets and liabilities were accounted for and recognized at
fair value on the transaction date. Accordingly, amortization of
intangible assets consists of amortization associated with intangible
assets recognized in connection with this transaction.

Stock-based compensation. Non-cash stock-based compensation
relates to awards under both the Dell Technologies Inc. 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.

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 Six Months Ended

August 3,

2018

August 4,

2017*

August 3,

2018

August 4,

2017*

GAAP revenue $ 128,778 $ 116,240 $ 254,939 $ 229,918
Impact of purchase accounting   146     292  
Non-GAAP revenue $ 128,778   $ 116,386   $ 254,939   $ 230,210  
 
GAAP gross margin $ 66,230 $ 60,333 $ 131,861 $ 120,398
Amortization of intangibles 3,411 3,411 6,821 6,821
Impact of purchase accounting 156 312
Stock-based compensation expense 275   217   544   441  
Non-GAAP gross margin $ 69,916   $ 64,117   $ 139,226   $ 127,972  
 
GAAP research and development expenses $ 22,453 $ 19,693 $ 44,807 $ 39,172
Stock-based compensation expense (1,006 ) (759 ) (2,037 ) (1,573 )
Non-GAAP research and development expenses $ 21,447   $ 18,934   $ 42,770   $ 37,599  
 
GAAP sales and marketing expenses $ 35,521 $ 35,433 $ 71,191 $ 71,611
Stock-based compensation expense (720 ) (411 ) (1,341 ) (625 )
Non-GAAP sales and marketing expenses $ 34,801   $ 35,022   $ 69,850   $ 70,986  
 
GAAP general and administrative expenses $ 22,419 $ 21,138 $ 47,616 $ 44,542
Amortization of intangibles (3,523 ) (3,523 ) (7,047 ) (7,047 )
Impact of purchase accounting (256 ) (512 )
Stock-based compensation expense (2,911 ) (2,143 ) (5,720 ) (4,519 )
Non-GAAP general and administrative expenses $ 15,985   $ 15,216   $ 34,849   $ 32,464  
 
GAAP operating loss $ (14,163 ) $ (15,931 ) $ (31,753 ) $ (34,927 )
Amortization of intangibles 6,934 6,934 13,868 13,868
Impact of purchase accounting 412 824
Stock-based compensation expense 4,912   3,530   9,642   7,158  
Non-GAAP operating loss $ (2,317 ) $ (5,055 ) $ (8,243 ) $ (13,077 )
 
GAAP net loss $ (9,769 ) $ (10,271 ) $ (23,588 ) $ (23,548 )
Amortization of intangibles 6,934 6,934 13,868 13,868
Impact of purchase accounting 412 824
Stock-based compensation expense 4,912 3,530 9,642 7,158
Aggregate adjustment for income taxes (2,938 ) (4,122 ) (5,329 ) (7,356 )
Non-GAAP net loss $ (861 ) $ (3,517 ) $ (5,407 ) $ (9,054 )
 
GAAP net loss per share $ (0.12 ) $ (0.13 ) $ (0.29 ) $ (0.29 )
Amortization of intangibles 0.09 0.09 0.17 0.17
Impact of purchase accounting 0.01 0.01
Stock-based compensation expense 0.06 0.04 0.12 0.09
Aggregate adjustment for income taxes (0.04 ) (0.05 ) (0.07 ) (0.09 )
Non-GAAP net loss per share * $ (0.01 ) $ (0.04 ) $ (0.07 ) $ (0.11 )
 
* Sum of reconciling items may differ from total due to rounding
of individual components
GAAP net loss $ (9,769 ) $ (10,271 ) $ (23,588 ) $ (23,548 )
Interest and other, net (1,003 ) 420 (1,508 ) 1,069
Income tax benefit (3,391 ) (6,080 ) (6,657 ) (12,448 )
Depreciation and amortization 10,225 10,405 20,512 20,666
Stock-based compensation expense 4,912 3,530 9,642 7,158
Impact of purchase accounting   146     292  
Adjusted EBITDA $ 974   $ (1,850 ) $ (1,599 ) $ (6,811 )
 

* Certain prior period amounts have been adjusted as a result of
the adoption of the accounting standard for revenue recognition
set forth in ASC 606.

 
 
SECUREWORKS CORP.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in thousands)
(unaudited)
               
 
Three Months Ended Six Months Ended

Percentage of Total Net Revenue

August 3,

2018

August 4,

2017*

August 3,

2018

August 4,

2017*

 
GAAP gross margin 51.4 % 51.9 % 51.7 % 52.4 %
Non-GAAP adjustment 2.9 % 3.2 % 2.9 % 3.2 %
Non-GAAP gross margin 54.3 % 55.1 % 54.6 % 55.6 %
 
GAAP research and development expenses 17.4 % 16.9 % 17.6 % 17.0 %
Non-GAAP adjustment (0.7 )% (0.6 )% (0.8 )% (0.7 )%
Non-GAAP research and development expenses 16.7 % 16.3 % 16.8 % 16.3 %
 
GAAP sales and marketing expenses 27.6 % 30.5 % 27.9 % 31.1 %
Non-GAAP adjustment (0.6 )% (0.4 )% (0.5 )% (0.3 )%
Non-GAAP sales and marketing expenses 27.0 % 30.1 % 27.4 % 30.8 %
 
GAAP general and administrative expenses 17.4 % 18.2 % 18.7 % 19.4 %
Non-GAAP adjustment (5.0 )% (5.1 )% (5.0 )% (5.3 )%
Non-GAAP general and administrative expenses 12.4 % 13.1 % 13.7 % 14.1 %
 
GAAP operating loss (11.0 )% (13.7 )% (12.5 )% (15.2 )%
Non-GAAP adjustment 9.2 % 9.4 % 9.3 % 9.5 %
Non-GAAP operating loss (1.8 )% (4.3 )% (3.2 )% (5.7 )%
 
GAAP net loss (7.6 )% (8.8 )% (9.3 )% (10.2 )%
Non-GAAP adjustment 6.9 % 5.8 % 7.2 % 6.3 %
Non-GAAP net loss (0.7 )% (3.0 )% (2.1 )% (3.9 )%
 

* Certain prior period amounts have been adjusted as a result of
the adoption of the accounting standard for revenue recognition
set forth in ASC 606.

 
 
SECUREWORKS CORP.
Reconciliation of GAAP to Non-GAAP Financial Measures
(in millions, except per share data)
(unaudited)
                 

Three Months Ending

November 2, 2018

 

Fiscal Year Ending

February 1, 2019

Low End of

Guidance

High End of

Guidance

   

Low End of

Guidance

High End of

Guidance

 
GAAP revenue $ 130 $ 131 $ 518 $ 520
Impact of purchase accounting        
Non-GAAP revenue $ 130   $ 131   $ 518   $ 520  
 
GAAP net loss per share $ (0.17 ) $ (0.16 ) $ (0.61 ) $ (0.59 )
Amortization of intangibles 0.09 0.09 0.34 0.34
Stock-based compensation expense 0.06 0.06 0.24 0.24
Aggregate adjustment for income taxes (0.03 ) (0.03 ) (0.14 ) (0.14 )
Non-GAAP net loss per share* $ (0.06 ) $ (0.05 ) $ (0.17 ) $ (0.15 )
 
GAAP net loss $ (50 ) $ (48 )
Interest and other, net (1 ) (1 )
Income tax benefit (15 ) (14 )
Depreciation and amortization 41 41
Stock-based compensation expense 19   19  
Adjusted EBITDA* $ (5 ) $ (3 )
 
Other Items
Effective tax rate 22 %
Weighted average shares outstanding (in millions) 80.9
Cash flow from operations $35-$40
Capital expenditures $16-$17
Monthly recurring revenue (MRR) $37-$39
 

* Sum of reconciling items may differ from total due to
rounding of individual components

Sum of quarterly guidance may differ from full year guidance
due to rounding

 
 

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