Press release

Secureworks Reports Third Quarter Fiscal 2020 Results

0
Sponsored by Businesswire

Secureworks (NASDAQ: SCWX), a leading global cybersecurity company that protects organizations in the digitally connected world, today announced financial results for its third quarter ended November 1, 2019.

“In the world of accelerating digital transformation and complex technology ecosystems, effective security programs require a more agile and scalable model. Our model goes beyond prevention alone, to leverage the powerful combination of machine and human intelligence and the community. As a global leader in the security industry, we are proud to partner with other leading security and technology companies to deliver solutions to the market that work in concert to increase the speed of detection and effectiveness of response to reduce risk,” said Michael R. Cote, Chief Executive Officer of Secureworks.

“Revenue, gross margin, adjusted EBITDA and cash flow were strong again in the third quarter and exceeded our expectations. We continue to invest in our security analytics platform and SaaS-based offerings and, as we finish the year, we remain focused on building upon our progress, driving our business transformation and bringing our vision of the future of security to life,” continued Mr. Cote.

Business and operational developments include:

  • Red Cloak™ Threat Detection and Response (TDR) was launched in November as part of an expanded Dell Safeguard and Response portfolio of offerings, adding the power of advanced security detection and response capabilities to Dell’s endpoint products. TDR is being sold in combination with VMware Carbon Black’s endpoint and next generation anti-virus products. TDR applies world-class analytics and threat intelligence that extends beyond the endpoint to a customer’s network and cloud environment. Managed Detection and Response (MDR) is also now available to Dell customers through the Dell Safeguard and Response portfolio of offerings.
  • As customers accelerate the pace of cloud adoptions, Secureworks has partnered with Microsoft to extend our advanced detection and response capabilities to Microsoft ATP and O365 customers via our TDR application. Through this partnership, Secureworks’ TDR software will provide Microsoft customers full visibility into their technology landscape, helping them rid their environment of hard to detect threats, without the need to deploy another agent.

Third Quarter Fiscal 2020 Financial Results Highlights

  • Both GAAP and non-GAAP revenue increased 6.2 percent to $141.3 million from $133.1 million in the third quarter of fiscal 2019.
  • GAAP gross margin was 56.4 percent in the third quarter of fiscal 2020, compared with 53.3 percent in the same period last year. Non-GAAP gross margin was 59.2 percent compared with 56.0 percent in the third quarter of fiscal 2019.
  • GAAP net loss was $7.9 million, or $0.10 per share, in the third quarter of fiscal 2020, compared with $3.7 million, or $0.05 per share, in the prior year. Non-GAAP net income was $0.8 million, or $0.01 per share, in the third quarter of fiscal 2020, compared with $5.2 million, or $0.06 per share, in the same prior year period.
  • Adjusted EBITDA was $5.8 million, compared with $8.6 million in the third quarter of fiscal 2019.
  • Cash provided by operating activities for the three months ended November 1, 2019 was $22.6 million.
  • Secureworks ended the third quarter of fiscal 2020 with $138.8 million in cash and cash equivalents.
  • Monthly recurring revenue as of November 1, 2019 was $36.9 million. The Company’s monthly recurring revenue metric represents the monthly value of its subscription contracts, including operational backlog, as of period end.

Fourth Quarter and Updated Full Fiscal Year 2020 Guidance

For the fourth quarter of fiscal 2020, the Company expects:

  • Revenue of $138 to $140 million on both a GAAP and non-GAAP basis.
  • GAAP net loss per share of $0.13 to $0.12 and non-GAAP net loss per share of $0.01 to $0.00.

Based on third quarter fiscal 2020 performance and current business trends, the Company has updated its guidance for the full fiscal year 2020. The Company now expects:

  • GAAP and non-GAAP revenue of $549 to $551 million.
  • GAAP net loss of $37 to $36 million and $0.46 to $0.45 on a per share basis.
  • Non-GAAP net loss per share of $0.03 to $0.02.
  • Adjusted EBITDA of $11 to $12 million.
  • Cash flow from operations of $45 to $50 million.

Conference Call Information

As previously announced, the Company will hold a conference call to discuss its third quarter fiscal 2020 results and outlook for its third quarter and full year fiscal 2020 on December 5, 2019, at 8:00 a.m. ET. A live audio webcast of the conference call and the related supplemental financial information 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 income (loss), non-GAAP net income (loss), non-GAAP earnings (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 fourth quarter of fiscal 2020 and for full year fiscal 2020, and net loss, adjusted EBITDA, and cash flow from operations for full year fiscal 2020, 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 customers, retain existing customers and increase its annual contract values; the Company’s reliance on customers 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 customers 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 effect of Brexit on the Company’s 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 risks associated with cyber attacks or other data security incidents; the ability of the Company’s solutions to interoperate with its customers’ 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; 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 customers; 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 1, 2019, 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 technology-driven cybersecurity leader that protects organizations in the digitally connected world. Built on proprietary technologies and world-class threat intelligence, our applications and solutions help prevent, detect, and respond to cyber threats. Red Cloak™ software brings advanced threat analytics to thousands of customers, and the Secureworks Counter Threat Platform™ processes over 300 billion threat events per day. We understand complex security environments and are passionate about simplifying security with Defense in Concert™ so that security becomes a business enabler. More than 4,000 customers across over 50 countries are protected by Secureworks, benefit from our network effect and are Collectively Smarter. Exponentially Safer.™ www.secureworks.com

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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

 

 

 

 

 

November 1,

2019

 

November 2,

2018

 

November 1,

2019

 

November 2,

2018

Net revenue

 

$

141,332

 

 

$

133,060

 

 

$

410,779

 

 

$

387,999

 

Cost of revenue

 

61,568

 

 

62,133

 

 

188,004

 

 

185,211

 

 

Gross margin

 

79,764

 

 

70,927

 

 

222,775

 

 

202,788

 

 

Research and development

 

24,095

 

 

21,114

 

 

71,600

 

 

65,921

 

 

Sales and marketing

 

40,726

 

 

34,773

 

 

116,966

 

 

105,964

 

 

General and administrative

 

25,078

 

 

21,619

 

 

73,862

 

 

69,235

 

 

 

Total operating expenses

 

89,899

 

 

77,506

 

 

262,428

 

 

241,120

 

 

Operating loss

 

(10,135

)

 

(6,579

)

 

(39,653

)

 

(38,332

)

Interest and other, net

 

(1,257

)

 

1,074

 

 

961

 

 

2,582

 

 

Loss before income taxes

 

(11,392

)

 

(5,505

)

 

(38,692

)

 

(35,750

)

Income tax benefit

 

(3,484

)

 

(1,770

)

 

(12,254

)

 

(8,427

)

 

Net loss

 

$

(7,908

)

 

$

(3,735

)

 

$

(26,438

)

 

$

(27,323

)

 

 

 

 

 

 

 

 

 

Loss per common share (basic and diluted)

 

$

(0.10

)

 

$

(0.05

)

 

$

(0.33

)

 

$

(0.34

)

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding (basic and diluted)

 

80,518

 

 

80,892

 

 

80,553

 

 

80,751

 

 

 

 

 

 

 

 

 

 

 

 

 

Percentage of Total Net Revenue

 

 

 

 

 

 

 

 

Gross margin

 

56.4

%

 

53.3

%

 

54.2

%

 

52.3

%

Research and development

 

17.0

%

 

15.9

%

 

17.4

%

 

17.0

%

Sales and marketing

 

28.8

%

 

26.1

%

 

28.5

%

 

27.3

%

General and administrative

 

17.7

%

 

16.2

%

 

18.0

%

 

17.8

%

Operating expenses

 

63.6

%

 

58.2

%

 

63.9

%

 

62.1

%

Operating loss

 

(7.2

)%

 

(4.9

)%

 

(9.7

)%

 

(9.9

)%

Loss before income taxes

 

(8.1

)%

 

(4.1

)%

 

(9.4

)%

 

(9.2

)%

Net loss

 

(5.6

)%

 

(2.8

)%

 

(6.4

)%

 

(7.0

)%

Effective tax rate

 

30.6

%

 

32.2

%

 

31.7

%

 

23.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Note: Percentage growth rates are calculated based on underlying data in thousands

 

SECUREWORKS CORP.

Condensed Consolidated Statements of Financial Position

(in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

November 1,

2019

 

February 1,

2019

Assets:

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

 

$

138,788

 

 

$

129,592

 

 

Accounts receivable, net

 

 

118,396

 

 

141,344

 

 

Inventories, net

 

 

906

 

 

468

 

 

Other current assets

 

 

26,177

 

 

27,604

 

 

 

Total current assets

 

 

284,267

 

 

299,008

 

Property and equipment, net

 

 

30,580

 

 

35,978

 

Operating lease right-of-use assets, net

 

 

24,035

 

 

 

Goodwill

 

 

416,487

 

 

416,487

 

Intangible assets, net

 

 

187,135

 

 

206,448

 

Other non-current assets

 

 

87,502

 

 

78,238

 

 

 

Total assets

 

 

$

1,030,006

 

 

$

1,036,159

 

Liabilities and Stockholders’ Equity:

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

 

$

20,407

 

 

$

16,177

 

 

Accrued and other

 

 

71,166

 

 

86,495

 

 

Short-term deferred revenue

 

 

169,576

 

 

157,865

 

 

 

Total current liabilities

 

 

261,149

 

 

260,537

 

Long-term deferred revenue

 

 

14,276

 

 

16,064

 

Operating lease liabilities, non-current

 

 

27,091

 

 

 

Other non-current liabilities

 

 

60,518

 

 

66,851

 

 

 

Total liabilities

 

 

363,034

 

 

343,452

 

Stockholders’ equity

 

 

666,972

 

 

692,707

 

Total liabilities and stockholders’ equity

 

 

$

1,030,006

 

 

$

1,036,159

 

 

SECUREWORKS CORP.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

 

 

 

 

Nine Months Ended

 

 

November 1,

2019

 

November 2,

2018

Cash flows from operating activities:

 

 

 

 

Net loss

 

$

(26,438

)

 

$

(27,323

)

Adjustments to reconcile net loss to net cash provided by operating activities

 

 

 

 

Depreciation and amortization

 

32,017

 

 

30,872

 

Stock-based compensation expense

 

15,617

 

 

14,475

 

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

 

(102

)

 

(1,924

)

Income tax benefit

 

(12,254

)

 

(8,427

)

Other non cash impacts

 

1,830

 

 

 

Provision for doubtful accounts

 

1,651

 

 

2,371

 

Changes in assets and liabilities:

 

 

 

 

Accounts receivable

 

21,689

 

 

20,756

 

Net transactions with parent

 

(18,571

)

 

2,272

 

Inventories

 

(438

)

 

398

 

Other assets

 

10,838

 

 

(4,472

)

Accounts payable

 

9,086

 

 

573

 

Deferred revenue

 

9,848

 

 

11,252

 

Accrued and other liabilities

 

(8,921

)

 

(14,784

)

Net cash provided by operating activities

 

35,852

 

 

26,039

 

Cash flows from investing activities:

 

 

 

 

Capital expenditures

 

(12,082

)

 

(6,974

)

Net cash used in investing activities

 

(12,082

)

 

(6,974

)

Cash flows from financing activities:

 

 

 

 

Principal payments on financing arrangement with Dell Financial Services

 

 

 

(1,104

)

Taxes paid on vested restricted shares

 

(8,197

)

 

(2,153

)

Purchases of stock for treasury

 

(6,377

)

 

(1,068

)

Payments on financed capital expenditures

 

 

 

(500

)

Net cash used in financing activities

 

(14,574

)

 

(4,825

)

Net (decrease)/increase in cash and cash equivalents

 

9,196

 

 

14,240

 

Cash and cash equivalents at beginning of the period

 

129,592

 

 

101,539

 

Cash and cash equivalents at end of the period

 

$

138,788

 

 

$

115,779

 

 

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 income (loss), non-GAAP net income (loss), non-GAAP earnings (loss) per share and adjusted EBITDA, which are non-GAAP financial measures provided as a supplement to the results provided in accordance with GAAP. A detailed discussion of the Company’s reasons for including these non-GAAP financial measures, the limitations associated with these measures, the items excluded from these measures, and our reason for excluding those items are presented in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Measures” in our periodic reports filed with the SEC. The Company encourages investors to review the non-GAAP discussion in conjunction with the presentation of non-GAAP financial measures.

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SECUREWORKS CORP.

Reconciliation of GAAP to Non-GAAP Financial Measures

(in thousands, except per share data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

 

November 1,

2019

 

November 2,

2018

 

November 1,

2019

 

November 2,

2018

GAAP and non-GAAP revenue

 

$

141,332

 

 

$

133,060

 

 

$

410,779

 

 

$

387,999

 

 

 

 

 

 

 

 

 

 

 

 

GAAP gross margin

 

$

79,764

 

 

$

70,927

 

 

$

222,775

 

 

$

202,788

 

 

Amortization of intangibles

 

3,559

 

 

3,410

 

 

10,529

 

 

10,231

 

 

Stock-based compensation expense

 

353

 

 

224

 

 

1,009

 

 

768

 

 

 

Non-GAAP gross margin

 

$

83,676

 

 

$

74,561

 

 

$

234,313

 

 

$

213,787

 

 

 

 

 

 

 

 

 

 

 

 

GAAP research and development expenses

 

$

24,095

 

 

$

21,114

 

 

$

71,600

 

 

$

65,921

 

 

Stock-based compensation expense

 

(996

)

 

(933

)

 

(3,157

)

 

(2,970

)

 

 

Non-GAAP research and development expenses

$

23,099

 

 

$

20,181

 

 

$

68,443

 

 

$

62,951

 

 

 

 

 

 

 

 

 

 

 

 

GAAP sales and marketing expenses

 

$

40,726

 

 

$

34,773

 

 

$

116,966

 

 

$

105,964

 

 

Stock-based compensation expense

 

(691

)

 

(800

)

 

(2,389

)

 

(2,141

)

 

 

Non-GAAP sales and marketing expenses

 

$

40,035

 

 

$

33,973

 

 

$

114,577

 

 

$

103,823

 

 

 

 

 

 

 

 

 

 

 

 

GAAP general and administrative expenses

 

$

25,078

 

 

$

21,619

 

 

$

73,862

 

 

$

69,235

 

 

Amortization of intangibles

 

(3,524

)

 

(3,524

)

 

(10,571

)

 

(10,571

)

 

Stock-based compensation expense

 

(3,052

)

 

(2,876

)

 

(9,062

)

 

(8,596

)

 

 

Non-GAAP general and administrative expenses

$

18,502

 

 

$

15,219

 

 

$

54,229

 

 

$

50,068

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating income (loss)

 

$

(10,135

)

 

$

(6,579

)

 

$

(39,653

)

 

$

(38,332

)

 

Amortization of intangibles

 

7,083

 

 

6,934

 

 

21,100

 

 

20,802

 

 

Stock-based compensation expense

 

5,092

 

 

4,833

 

 

15,617

 

 

14,475

 

 

 

Non-GAAP operating income (loss)

 

$

2,040

 

 

$

5,188

 

 

$

(2,936

)

 

$

(3,055

)

 

 

 

 

 

 

 

 

 

 

 

GAAP net income (loss)

 

$

(7,908

)

 

$

(3,735

)

 

$

(26,438

)

 

$

(27,323

)

 

Amortization of intangibles

 

7,083

 

 

6,934

 

 

21,100

 

 

20,802

 

 

Stock-based compensation expense

 

5,092

 

 

4,833

 

 

15,617

 

 

14,475

 

 

Aggregate adjustment for income taxes

 

(3,438

)

 

(2,801

)

 

(11,997

)

 

(8,130

)

 

 

Non-GAAP net income (loss)

 

$

829

 

 

$

5,231

 

 

$

(1,718

)

 

$

(176

)

 

 

 

 

 

 

 

 

 

 

 

GAAP earnings (loss) per share

 

$

(0.10

)

 

$

(0.05

)

 

$

(0.33

)

 

$

(0.34

)

 

Amortization of intangibles

 

0.09

 

 

0.09

 

 

0.26

 

 

0.26

 

 

Stock-based compensation expense

 

0.06

 

 

0.06

 

 

0.19

 

 

0.18

 

 

Aggregate adjustment for income taxes

 

(0.04

)

 

(0.03

)

 

(0.15

)

 

(0.10

)

 

 

Non-GAAP earnings (loss) per share *

 

$

0.01

 

 

$

0.06

 

 

$

(0.02

)

 

$

0.00

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

GAAP net income (loss)

 

$

(7,908

)

 

$

(3,735

)

 

$

(26,438

)

 

$

(27,323

)

 

Interest and other, net

 

1,257

 

 

(1,074

)

 

(961

)

 

(2,582

)

 

Income tax benefit

 

(3,484

)

 

(1,770

)

 

(12,254

)

 

(8,427

)

 

Depreciation and amortization

 

10,869

 

 

10,360

 

 

32,017

 

 

30,872

 

 

Stock-based compensation expense

 

5,092

 

 

4,833

 

 

15,617

 

 

14,475

 

 

 

Adjusted EBITDA

 

$

5,826

 

 

$

8,614

 

 

$

7,981

 

 

$

7,015

 

 

SECUREWORKS CORP.

Reconciliation of GAAP to Non-GAAP Financial Measures

(in thousands)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

Percentage of Total Net Revenue

 

November 1,

2019

 

November 2,

2018

 

November 1,

2019

 

November 2,

2018

 

 

 

 

 

 

 

 

 

GAAP gross margin

 

56.4

%

 

53.3

%

 

54.2

%

 

52.3

%

 

Non-GAAP adjustment

 

2.8

%

 

2.7

%

 

2.8

%

 

2.8

%

Non-GAAP gross margin

 

59.2

%

 

56.0

%

 

57.0

%

 

55.1

%

 

 

 

 

 

 

 

 

 

 

 

GAAP research and development expenses

 

17.0

%

 

15.9

%

 

17.4

%

 

17.0

%

 

Non-GAAP adjustment

 

(0.7

)%

 

(0.7

)%

 

(0.7

)%

 

(0.8

)%

Non-GAAP research and development expenses

 

16.3

%

 

15.2

%

 

16.7

%

 

16.2

%

 

 

 

 

 

 

 

 

 

 

 

GAAP sales and marketing expenses

 

28.8

%

 

26.1

%

 

28.5

%

 

27.3

%

 

Non-GAAP adjustment

 

(0.5

)%

 

(0.6

)%

 

(0.6

)%

 

(0.5

)%

Non-GAAP sales and marketing expenses

 

28.3

%

 

25.5

%

 

27.9

%

 

26.8

%

 

 

 

 

 

 

 

 

 

 

 

GAAP general and administrative expenses

 

17.7

%

 

16.2

%

 

18.0

%

 

17.8

%

 

Non-GAAP adjustment

 

(4.6

)%

 

(4.8

)%

 

(4.8

)%

 

(4.9

)%

Non-GAAP general and administrative expenses

 

13.1

%

 

11.4

%

 

13.2

%

 

12.9

%

 

 

 

 

 

 

 

 

 

 

 

GAAP operating (loss)

 

(7.2

)%

 

(4.9

)%

 

(9.7

)%

 

(9.9

)%

 

Non-GAAP adjustment

 

8.6

%

 

8.8

%

 

9.0

%

 

9.1

%

Non-GAAP operating (loss)

 

1.4

%

 

3.9

%

 

(0.7

)%

 

(0.8

)%

 

 

 

 

 

 

 

 

 

 

 

GAAP net (loss)

 

(5.6

)%

 

(2.8

)%

 

(6.4

)%

 

(7.0

)%

 

Non-GAAP adjustment

 

6.2

%

 

6.7

%

 

6.0

%

 

7.0

%

Non-GAAP net (loss)

 

0.6

%

 

3.9

%

 

(0.4

)%

 

0.0

%

 
 

SECUREWORKS CORP.

Reconciliation of GAAP to Non-GAAP Financial Measures

(in millions, except per share data)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ending

 

Fiscal Year Ending

 

 

January 31, 2020

 

January 31, 2020

 

 

Low End of

Guidance

 

High End of

Guidance

 

Low End of

Guidance

 

High End of

Guidance

 

 

 

 

 

 

 

 

 

GAAP and non-GAAP revenue

 

$

138

 

 

$

140

 

 

$

549

 

 

$

551

 

 

 

 

 

 

 

 

 

 

GAAP (loss) per share

 

$

(0.13

)

 

$

(0.12

)

 

$

(0.46

)

 

$

(0.45

)

Amortization of intangibles

 

0.09

 

 

0.09

 

 

0.35

 

 

0.35

 

Stock-based compensation expense

 

0.07

 

 

0.07

 

 

0.27

 

 

0.27

 

Aggregate adjustment for income taxes

 

(0.04

)

 

(0.04

)

 

(0.19

)

 

(0.19

)

Non-GAAP (loss) per share*

 

$

(0.01

)

 

$

0.00

 

 

$

(0.03

)

 

$

(0.02

)

 

 

 

 

 

 

 

 

 

GAAP net loss

 

 

 

 

 

$

(37

)

 

$

(36

)

Interest and other, net

 

 

 

 

 

(1

)

 

(1

)

Income tax benefit

 

 

 

 

 

(16

)

 

(15

)

Depreciation and amortization

 

 

 

 

 

43

 

 

43

 

Stock-based compensation expense

 

 

 

 

 

21

 

 

21

 

Adjusted EBITDA*

 

 

 

 

 

$

11

 

 

$

12

 

 

 

 

 

 

 

 

 

 

Other Items

 

 

 

 

 

 

 

 

Effective tax rate

 

 

 

 

 

 

 

30

%

Weighted average shares outstanding (in millions) – basic

 

 

 

 

 

 

 

80.5

 

Weighted average shares outstanding (in millions) – diluted

 

 

 

 

 

 

 

81.5

 

Cash flow from operations

 

 

 

 

 

 

 

$45 – $50

Capital expenditures

 

 

 

 

 

 

 

$14 – $16

 

*

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