Reported Earnings • Dec 05
Third quarter 2025 earnings released: US$0.31 loss per share (vs US$0.17 loss in 3Q 2024) Third quarter 2025 results: US$0.31 loss per share (further deteriorated from US$0.17 loss in 3Q 2024). Revenue: US$82.7m (down 7.4% from 3Q 2024). Net loss: US$27.5m (loss widened 91% from 3Q 2024). Revenue is forecast to grow 2.7% p.a. on average during the next 3 years, compared to a 12% growth forecast for the Software industry in the US. Over the last 3 years on average, earnings per share has fallen by 17% per year whereas the company’s share price has fallen by 19% per year. Tillkännagivande • Nov 21
SecureWorks Corp. to Report Q3, 2025 Results on Dec 04, 2024 SecureWorks Corp. announced that they will report Q3, 2025 results Pre-Market on Dec 04, 2024 Tillkännagivande • Oct 23
Sophos, Inc. entered into a definitive agreement to acquire SecureWorks Corp. (NasdaqGS:SCWX) from Dell Technologies Inc. (NYSE:DELL) and others for approximately $870 million. Sophos, Inc. entered into a definitive agreement to acquire SecureWorks Corp. (NasdaqGS:SCWX) from Dell Technologies Inc. (NYSE:DELL) and others for approximately $870 million on October 21, 2024. Under the terms of the agreement, Sophos intends to acquire SecureWorks in an all-cash transaction. SecureWorks shareholders will receive $8.50 per share in cash. In case of termination of the transaction under certain circumstances, SecureWorks will be required to pay Sophos a termination fee of $26,000,000. Sophos will be required to pay SecureWorks a termination fee of $52,000,000 under certain circumstances.
Consummation of the transaction is subject to certain customary conditions, including, but not limited to (i) SecureWorks receiving the Written Consent (which has been satisfied), and (ii) (a) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended and (b) the clearance or approval under certain specified antitrust laws and foreign investment laws. The board of directors of SecureWorks has unanimously approved the transaction. The board of directors of Sophos also approved the transaction. Dell Technologies Inc. approved the transaction by a written consent. The transaction is expected to close in early 2025.
Bradley C. Reed and Steven A. Page, Aaron H. Lorber, Amber Harezlak, Brian Ford, Daniel K. Zach, Jack Coles and Matthew Sinclair-Thomson of Kirkland & Ellis LLP are acting as legal counsel to Sophos and Goldman Sachs & Co. LLC., Barclays, BofA Securities, HSBC Securities (USA) Inc. and UBS Investment Bank are acting as financial advisors and providing debt financing for the transaction. Piper Sandler & Company and Morgan Stanley & Co. LLC are acting as financial advisors to Secureworks and Scott A. Barshay and Laura C. Turano, Dotun Obadina, John Kennedy, Patricia Vaz de Almeida, Bruce Gruder, Jason Tyler, Nathan Mitchell, Jarrett Hoffman, Sasha Belinkie, Jonathan Ashtor, Matthew Rosenberg and Brian Krause of Paul, Weiss, Rifkind, Wharton & Garrison LLP are acting as legal counsel. Wells Fargo Corporate & Investment Banking acted as financial advisor to SecureWorks. The board of directors of SecureWorks received a fairness opinion from Piper Sandler & Co. and Morgan Stanley & Co. LLC. Major Estimate Revision • Sep 12
Consensus EPS estimates fall by 29% The consensus outlook for fiscal year 2025 has been updated. 2025 expected loss increased from -US$0.38 to -US$0.49 per share. Revenue forecast unchanged at US$330.4m. Software industry in the US expected to see average net income growth of 15% next year. Consensus price target up from US$6.38 to US$7.40. Share price rose 9.0% to US$8.02 over the past week. Reported Earnings • Sep 06
Second quarter 2025 earnings released: US$0.17 loss per share (vs US$0.38 loss in 2Q 2024) Second quarter 2025 results: US$0.17 loss per share (improved from US$0.38 loss in 2Q 2024). Revenue: US$82.2m (down 12% from 2Q 2024). Net loss: US$14.7m (loss narrowed 55% from 2Q 2024). Revenue is forecast to grow 1.5% p.a. on average during the next 3 years, compared to a 12% growth forecast for the Software industry in the US. Over the last 3 years on average, earnings per share has fallen by 27% per year whereas the company’s share price has fallen by 26% per year. Tillkännagivande • Aug 31
Dell Reportedly Trying Again to Sell Cybersecurity Firm SecureWorks Dell Technologies Inc. (NYSE:DELL) is again exploring a possible sale of SecureWorks Corp. (NasdaqGS:SCWX), after unsuccessful earlier attempts to find a buyer for the U.S. cybersecurity firm, according to people familiar with the matter. Round Rock, Texas-based Dell, founded by CEO Michael Dell, has tapped investment bankers at Morgan Stanley and Piper Sandler to gauge takeover interest from potential acquirers, which include private equity firms, the sources said, requesting anonymity as the discussions are confidential. A deal for SecureWorks, which has a market value of about $800 million, is not guaranteed and Dell could choose to maintain ownership of the company, the sources added. SecureWorks shares jumped as much as 34% following the exclusive Reuters report, then pared gains. Dell, which has shed many non-core assets in recent years, owns 79.2% of SecureWorks by holding all of the company's class B shares, according to recent filings. It also controls 97.4% of the company's voting stock through the dual class shares. Dell explored a sale of SecureWorks in 2019, part of an effort to trim the computer maker's debt pile, Reuters reported at the time. Atlanta, Georgia-based SecureWorks, which was founded in 1998, offers security services that aim to protect corporations from cyberattacks. The company's cloud-based platform Taegis helps detect advanced threats, according to its website. A SecureWorks spokesperson declined to comment on the sale process, adding that the company was "focused on serving our stakeholders and advancing our mission to secure human progress with Taegis." Dell and Piper Sandler declined to comment, while Morgan Stanley did not respond to requests for comment. Dell acquired SecureWorks for $612 million in 2011, before listing its shares through an initial public offering in New York in 2016. Tillkännagivande • Aug 16
SecureWorks Corp. to Report Q2, 2025 Results on Sep 05, 2024 SecureWorks Corp. announced that they will report Q2, 2025 results Pre-Market on Sep 05, 2024 Board Change • Aug 01
Insufficient new directors There is 1 new director who has joined the board in the last 3 years. The company's board is composed of: 1 new director. 3 experienced directors. 3 highly experienced directors. Independent Director Bill Cary was the last director to join the board, commencing their role in 2024. The company’s insufficient board refreshment is considered a risk according to the Simply Wall St Risk Model. New Risk • Jun 09
New minor risk - Shareholder dilution The company's shareholders have been diluted in the past year. Increase in shares outstanding: 2.8% This is considered a minor risk. Shareholder dilution occurs when there is an increase in the number of shares on issue that is not proportionally distributed between all shareholders. Often due to the company raising equity capital or some options being converted into stock. All else being equal, if there are more shares outstanding then each existing share will be entitled to a lower proportion of the company's total earnings, thus reducing earnings per share (EPS). While dilution might not always result in lower EPS (like if the company is using the capital to fund an EPS accretive acquisition) in a lot cases it does, along with lower dividends per share and less voting power at shareholder meetings. Currently, the following risks have been identified for the company: Major Risk Less than 1 year of cash runway based on free cash flow trend (-US$38m free cash flow). Minor Risks Currently unprofitable and not forecast to become profitable next year (US$70m net loss next year). Shareholders have been diluted in the past year (2.8% increase in shares outstanding). Tillkännagivande • Jun 08
SecureWorks Corp. Provides Earnings Guidance for the Second Quarter of Fiscal 2025 and Fiscal Year 2025 SecureWorks Corp. provided earnings guidance for the second quarter of fiscal 2025 and fiscal year 2025. For the quarter, the company expected revenue of $80 million to $82 million.For the year, the company expected total revenue of $325 million to $335 million. Reported Earnings • Jun 07
First quarter 2025 earnings released: US$0.42 loss per share (vs US$0.36 loss in 1Q 2024) First quarter 2025 results: US$0.42 loss per share (further deteriorated from US$0.36 loss in 1Q 2024). Revenue: US$85.7m (down 9.3% from 1Q 2024). Net loss: US$36.1m (loss widened 17% from 1Q 2024). Revenue is forecast to stay flat during the next 3 years compared to a 13% growth forecast for the Software industry in the US. Over the last 3 years on average, earnings per share has fallen by 40% per year but the company’s share price has only fallen by 31% per year, which means it has not declined as severely as earnings. Tillkännagivande • May 09
Secureworks® Releases of Secureworks Taegis™ NDR Secureworks® announced the release of Secureworks Taegis™ NDR, to stop nefarious threat actors from traversing the network. The dominance of cloud applications and remote working has created an explosion in network traffic, up over 20% from 2023 to 2024. Adversaries are taking advantage of these increased volumes to lurk unseen and slip past defenses. Taegis NDR leverages AI to uncover hidden threats, integrating threat prevention, detection and response to halt malicious activity on the network. Secureworks data, as measured across the company's global customer base, shows that Taegis NDR can block 99% of malicious activity identified on the network. With threat actors obfuscating their behavior, legacy network controls such as IDPs and firewalls are no longer able to keep pace or offer sufficient protection against evolving adversarial tactics. Organizations need a multi-layered cybersecurity strategy. Taegis NDR provides a complete picture of all internal traffic moving between endpoints as well as traffic entering and exiting the network at the edge. This visibility is crucial to identifying the presence of threat actors and how they are moving within the network. When integrated with the Taegis XDR platform, NDR correlates telemetry across different threat vectors to detect adversarial behavior that would otherwise be analyzed in silos and potentially missed. Generally available, and fully integrated with the Taegis platform, key features of Taegis NDR include: The flexibility to inspect all network traffic and choose to block immediately or be alerted to malicious traffic. The ability to continuously analyze network telemetry with deep packet inspection (DPI), without impacting network performance. 24/7 protection leveraging global real-world threat intelligence and expertly tuned countermeasures from Secureworks Counter Threat Unit™ (CTU™). Anomalous application and port usage detection powered by AI engine. Full device management, eliminating the burden on in-house teams as it includes all updates, patches, as well as hardware and software refreshes. Detailed change reporting reflecting daily management of countermeasures applied to secure the network helps organizations comply with audit requirements. A daily audit of NDR detections and emergency detection updates for urgent situations. The capability to be deployed both physically and virtually based on customer needs and budget. Tillkännagivande • Apr 24
Secureworks Leads with Advanced Integration of Threat Detection and Vulnerability Risk for Expedited Threat Solution Secureworks announced the ability to integrate vulnerability risk context with threat detection to prevent attackers from exploiting known vulnerabilities and expedite response times, improving an organization's security posture. The integration between Taegis™ XDR and Taegis VDR enables customers and partners to view known vulnerabilities in the context of threat data to accelerate investigation and remediation plans. Taegis is the first security platform to link the two worlds - risk-based vulnerability management with superior threat detection and response. V vulnerabilities account for one-third of breaches according to the Secureworks Counter Threat Unit™ (CTU™). Despite this, threat detection and response and vulnerability management functions have historically operated in silos, creating security blind spots. By integrating vulnerability context and workflows with threat detection, investigation, and response activities into a single view, Secureworks closes these gaps for IT and SecOps teams. As a result, Taegis creates a more resilient and responsive security environment for analysts to prevent, detect, prioritize and respond to threats, ultimately reducing risk to organizations. Taegis VDR and Taegis XDR both use Machine Learning (ML)-based prioritization algorithms to continuously improve over time. The combination of the two systems into a single, integrated platform improves upon both use cases by sharing additional information about assets that are vulnerable and those that are observing malicious activity. It also eliminates the need for security analysts to swivel between toolsets when examining the risksposed by vulnerabilities and threats, which can be a manual and time-consuming process. Leveraging a unified platform that can ingest and correlate data from both sources allows security analysts to achieve more detailed and rapid analyses. This, in turn, facilitates swifter remediation actions that not only halt adversaries but also strengthen the organization's defenses against future threats. Board Change • Mar 26
Less than half of directors are independent There is 1 new director who has joined the board in the last 3 years. The new board member was not an independent director. The company's board is composed of: 1 new director. 5 experienced directors. 1 highly experienced director. 3 independent directors (4 non-independent directors). Independent Director Buno Pati was the last independent director to join the board, commencing their role in 2016. The following issues are considered to be risks according to the Simply Wall St Risk Model: Minority of independent directors. Insufficient board refreshment. Reported Earnings • Mar 15
Full year 2024 earnings: EPS misses analyst expectations Full year 2024 results: US$1.00 loss per share (improved from US$1.36 loss in FY 2023). Revenue: US$365.9m (down 21% from FY 2023). Net loss: US$86.0m (loss narrowed 25% from FY 2023). Revenue was in line with analyst estimates. Earnings per share (EPS) missed analyst estimates by 49%. Revenue is expected to decline by 2.8% p.a. on average during the next 2 years, while revenues in the Software industry in the US are expected to grow by 12%. Over the last 3 years on average, earnings per share has fallen by 50% per year but the company’s share price has only fallen by 22% per year, which means it has not declined as severely as earnings. Tillkännagivande • Mar 14
Secureworks Corp. Provides Financial Guidance for the First Quarter and Full Fiscal Year 2025 SecureWorks Corp. provided financial guidance for the first quarter and full fiscal year 2025. For the first quarter of fiscal 2025, the company expects revenue of $83 million to $85 million.For the full fiscal year 2025, the company expects total revenue of $325 million to $335 million. Buy Or Sell Opportunity • Mar 12
Now 22% undervalued The stock has been flat over the last 90 days, currently trading at US$6.10. The fair value is estimated to be US$7.83, however this is not to be taken as a buy recommendation but rather should be used as a guide only. Revenue has declined by 12% over the last 3 years. Earnings per share has declined by 62%. Revenue is forecast to decline by 7.7% in 2 years. Earnings are forecast to grow by 60% in the next 2 years. Tillkännagivande • Feb 23
SecureWorks Corp. to Report Q4, 2024 Results on Mar 14, 2024 SecureWorks Corp. announced that they will report Q4, 2024 results Pre-Market on Mar 14, 2024 Price Target Changed • Jan 04
Price target decreased by 9.9% to US$6.38 Down from US$7.08, the current price target is an average from 3 analysts. New target price is approximately in line with last closing price of US$6.60. Stock is up 5.1% over the past year. The company is forecast to post a net loss per share of US$0.67 next year compared to a net loss per share of US$1.36 last year. Reported Earnings • Dec 08
Third quarter 2024 earnings: Revenues and EPS in line with analyst expectations Third quarter 2024 results: US$0.17 loss per share (improved from US$0.33 loss in 3Q 2023). Revenue: US$89.4m (down 19% from 3Q 2023). Net loss: US$14.4m (loss narrowed 49% from 3Q 2023). Revenue is expected to decline by 2.5% p.a. on average during the next 3 years, while revenues in the Software industry in the US are expected to grow by 12%. Over the last 3 years on average, earnings per share has fallen by 62% per year but the company’s share price has only fallen by 21% per year, which means it has not declined as severely as earnings. Tillkännagivande • Dec 08
Secureworks Corp. Provides Earnings Guidance for the Fourth Quarter and Fiscal Year 2024 Secureworks Corp. provided earnings guidance for the fourth quarter and fiscal year 2024. For the fourth quarter of fiscal 2024, the company expects: revenue of $86 million to $88 million. GAAP net loss per share of $0.16 to $0.18.Fiscal year 2024, the company expects total revenue of $363 million to $365 million. GAAP net loss per share of $1.06 to $1.08. GAAP net lossof $91 million to $93 million. Tillkännagivande • Nov 17
SecureWorks Corp. to Report Q3, 2024 Results on Dec 07, 2023 SecureWorks Corp. announced that they will report Q3, 2024 results Pre-Market on Dec 07, 2023 Price Target Changed • Sep 09
Price target decreased by 10.0% to US$7.50 Down from US$8.33, the current price target is an average from 3 analysts. New target price is 20% above last closing price of US$6.27. Stock is down 41% over the past year. The company is forecast to post a net loss per share of US$0.89 next year compared to a net loss per share of US$1.36 last year. Tillkännagivande • Sep 08
SecureWorks Corp. Provides Earnings Guidance for the Third Quarter and Full Year of Fiscal 2024 SecureWorks Corp. provided earnings guidance for the third quarter and full year of fiscal 2024. For the third quarter of fiscal 2024, the company expects revenue of $88 million to $90 million and GAAP net loss per share of $0.21 to $0.23 and non-GAAP net loss per share of $0.05 to $0.07.For the full fiscal year 2024, the company expects total revenue of $360 million to $368 million. GAAP net loss to be $94 million to $99 million or $1.09 to $1.15 loss per share. New Risk • Sep 08
New major risk - Revenue and earnings growth Earnings have declined by 38% per year over the past 5 years. This is considered a major risk. Ultimately, shareholders want to see a good return on their investment and that generally comes from sharing in the company's profits. If profits are declining over an extended period, then in most cases the share price will decline over time unless the company can turn around its fortunes. A trend of falling earnings can be very difficult to turn around. If the company is well already established it may also be a sign the company has matured and is in decline. In addition, if the company pays dividends it will also likely need to reduce or cut them, striking a dual blow to total shareholder returns. Currently, the following risks have been identified for the company: Major Risk Earnings have declined by 38% per year over the past 5 years. Minor Risk Currently unprofitable and not forecast to become profitable next year (US$76m net loss next year). Tillkännagivande • Aug 18
SecureWorks Corp. to Report Q2, 2024 Results on Sep 07, 2023 SecureWorks Corp. announced that they will report Q2, 2024 results Pre-Market on Sep 07, 2023 Tillkännagivande • Jun 25
SecureWorks Corp.(NasdaqGS:SCWX) dropped from Russell 2000 Dynamic Index SecureWorks Corp.(NasdaqGS:SCWX) dropped from Russell 2000 Dynamic Index Recent Insider Transactions • Jun 18
Insider recently bought US$80k worth of stock On the 13th of June, Neil Gagnon bought around 12k shares on-market at roughly US$6.94 per share. This transaction amounted to 1.5% of their direct individual holding at the time of the trade. In the last 3 months, they made an even bigger purchase worth US$295k. Insiders have collectively bought US$2.7m more in shares than they have sold in the last 12 months. Tillkännagivande • Jun 09
SecureWorks Corp. Provides Earnings Guidance for the Second Quarter and Full Fiscal Year 2024 SecureWorks Corp. provided earnings guidance for the second quarter and full fiscal year 2024. For the quarter, Company expects Revenue of $90 million to $92 million. GAAP net loss per share of $0.32 to $0.34. For the full year, Company expects Total revenue of $380 million to $400 million. GAAP net loss of $87 million to $95 million or GAAP net loss of per share $1.02 to $1.11. Price Target Changed • Jun 09
Price target decreased by 9.6% to US$7.83 Down from US$8.67, the current price target is an average from 3 analysts. New target price is 13% above last closing price of US$6.91. Stock is down 37% over the past year. The company is forecast to post a net loss per share of US$0.89 next year compared to a net loss per share of US$1.36 last year. Recent Insider Transactions • May 01
Insider recently bought US$295k worth of stock On the 27th of April, Neil Gagnon bought around 33k shares on-market at roughly US$9.04 per share. This transaction amounted to 5.0% of their direct individual holding at the time of the trade. This was the largest purchase by an insider in the last 3 months. Insiders have collectively bought US$2.0m more in shares than they have sold in the last 12 months. Recent Insider Transactions • Apr 23
Insider recently bought US$183k worth of stock On the 20th of April, Neil Gagnon bought around 20k shares on-market at roughly US$9.12 per share. This transaction amounted to 3.3% of their direct individual holding at the time of the trade. This was the largest purchase by an insider in the last 3 months. Insiders have collectively bought US$1.7m more in shares than they have sold in the last 12 months. Recent Insider Transactions • Apr 10
Insider recently bought US$82k worth of stock On the 5th of April, Neil Gagnon bought around 10k shares on-market at roughly US$8.25 per share. This transaction amounted to 1.6% of their direct individual holding at the time of the trade. In the last 3 months, they made an even bigger purchase worth US$145k. Insiders have collectively bought US$1.5m more in shares than they have sold in the last 12 months. Reported Earnings • Mar 24
Full year 2023 earnings: Revenues exceed analysts expectations while EPS lags behind Full year 2023 results: US$1.36 loss per share (further deteriorated from US$0.48 loss in FY 2022). Revenue: US$463.5m (down 13% from FY 2022). Net loss: US$114.5m (loss widened 188% from FY 2022). Revenue exceeded analyst estimates by 1.4%. Earnings per share (EPS) missed analyst estimates by 4.6%. Revenue is expected to decline by 2.8% p.a. on average during the next 2 years, while revenues in the Software industry in the US are expected to grow by 12%. Over the last 3 years on average, earnings per share has fallen by 53% per year but the company’s share price has only fallen by 11% per year, which means it has not declined as severely as earnings. Recent Insider Transactions • Feb 10
Insider recently bought US$145k worth of stock On the 7th of February, Neil Gagnon bought around 17k shares on-market at roughly US$8.55 per share. This transaction amounted to 3.0% of their direct individual holding at the time of the trade. This was the largest purchase by an insider in the last 3 months. Insiders have collectively bought US$1.4m more in shares than they have sold in the last 12 months. Recent Insider Transactions • Dec 26
Insider recently bought US$84k worth of stock On the 21st of December, Neil Gagnon bought around 15k shares on-market at roughly US$5.69 per share. This transaction amounted to 2.7% of their direct individual holding at the time of the trade. This was the largest purchase by an insider in the last 3 months. Insiders have collectively bought US$1.3m more in shares than they have sold in the last 12 months. Reported Earnings • Dec 02
Third quarter 2023 earnings: EPS exceeds analyst expectations while revenues lag behind Third quarter 2023 results: US$0.33 loss per share (further deteriorated from US$0.15 loss in 3Q 2022). Revenue: US$110.9m (down 17% from 3Q 2022). Net loss: US$28.1m (loss widened 119% from 3Q 2022). Revenue missed analyst estimates by 1.3%. Earnings per share (EPS) exceeded analyst estimates by 11%. Revenue is forecast to grow 4.9% p.a. on average during the next 3 years, compared to a 13% growth forecast for the Software industry in the US. Over the last 3 years on average, earnings per share has fallen by 36% per year but the company’s share price has only fallen by 23% per year, which means it has not declined as severely as earnings. Price Target Changed • Nov 16
Price target decreased to US$11.33 Down from US$12.33, the current price target is an average from 3 analysts. New target price is 49% above last closing price of US$7.61. Stock is down 63% over the past year. The company is forecast to post a net loss per share of US$1.31 next year compared to a net loss per share of US$0.48 last year. Seeking Alpha • Sep 13
SecureWorks Sees Taegis XDR Platform Growth But Forex Headwinds Remain Summary
SecureWorks recently reported its FQ2 2023 financial results.
The firm provides organizations with cybersecurity threat detection and response software and services.
SCWX has produced growth for its Taegis platform but overall results have disappointed.
I'm on Hold for SCWX in the near term.
A Quick Take On SecureWorks
SecureWorks (NASDAQ:SCWX) reported its FQ2 2023 financial results on September 1, 2022, meeting expected revenue but missing EPS estimates.
The company provides organizations with cybersecurity software and services to manage their IT threat environment.
While the firm is making progress away from its legacy business, given a slowing macroeconomic environment, strong dollar and increasing operating losses, I’m on Hold for SCWX in the near term.
SecureWorks Overview
Atlanta, Georgia based SecureWorks was founded in 1999 to provide a variety of endpoint protection and vulnerability management and response software to organizations of all sizes.
The firm is headed by Chief Executive Officer Wendy Thomas, who was previously Chief Financial Officer at Bridgevine and VP Finance at First Data Corporation.
The company’s primary offerings include:
Taegis extended detection & response [XDR]
Managed detection & response
Vulnerability management
Managed services
Security assessments & training
The firm acquires customers through its direct sales and marketing efforts as well as through partner referrals and technology alliances.
SCWX now counts a total of 1,500 customers for its flagship Taegis XDR platform.
SecureWorks' Market & Competition
According to a 2019 market research report by Global Market Insights, the global endpoint security market is projected to reach $7.5 billion by 2024, growing at a CAGR of 7% between 2017 and 2024.
Endpoints are considered to be the weakest links in network security; hence, securing them plays a critical role in effectively strengthening the overall network.
Additionally, growing in number and increasingly complex malware attacks force antivirus/antimalware solutions providers to constantly update their detection tools with the latest security patches.
Major vendors that provide or are developing endpoint security solutions include:
McAfee
Symantec Corporation
Cylance
Palo Alto Networks (PANW)
FireEye
F-Secure
Webroot
Okta (OKTA)
Per a market research report by Grand View Research on the Extended Detection and Response market, the firm estimated the value of the XDR market to have been $628 million in 2021 and forecasts its growth to reach $3.4 billion by 2030.
If achieved, this would represent CAGR of 20.7% from 2022 to 2030.
The U.S. XDR market history and forecast is shown in the chart below:
U.S. XDR Market (Grand View Research)
SecureWorks’ Recent Financial Performance
Total revenue by quarter has trended lower in recent quarters:
9 Quarter Total Revenue (Seeking Alpha)
Gross profit by quarter has also been lower more recently, as the chart shows below:
9 Quarter Gross Profit (Seeking Alpha)
Selling, G&A expenses as a percentage of total revenue by quarter have risen in recent quarters, a negative signal:
9 Quarter Selling, G&A % Of Revenue (Seeking Alpha)
Operating losses by quarter have worsened as shown below:
9 Quarter Operating Income (Seeking Alpha)
Earnings per share (Diluted) have also grown increasingly negative:
9 Quarter Earnings Per Share (Seeking Alpha)
(All data in above charts is GAAP)
In the past 12 months, SCWX's stock price has fallen 51.3% vs. the U.S. S&P 500 index's drop of around 8.5%, as the chart below indicates:
52 Week Stock Price (Seeking Alpha)
Valuation And Other Metrics For SecureWorks
Below is a table of relevant capitalization and valuation figures for the company:
Measure [TTM]
Amount
Enterprise Value / Sales
1.50
Revenue Growth Rate
-10.1%
Net Income Margin
-13.6%
GAAP EBITDA %
-10.0%
Market Capitalization
$900,690,000
Enterprise Value
$747,550,000
Operating Cash Flow
-$11,400,000
Earnings Per Share (Fully Diluted)
-$0.81
(Source - Seeking Alpha)
The Rule of 40 is a software industry rule of thumb that says that as long as the combined revenue growth rate and EBITDA percentage rate equal or exceed 40%, the firm is on an acceptable growth/EBITDA trajectory.
SCWX’s most recent GAAP Rule of 40 calculation was negative (20.2%) as of FQ2 2023, so the firm needs substantial improvement in this regard, per the table below:
Rule of 40 - GAAP
Calculation
Recent Rev. Growth %
-10.1%
GAAP EBITDA %
-10.0%
Total
-20.2%
(Source - Seeking Alpha)
Commentary On SecureWorks
In its last earnings call (Source - Seeking Alpha), covering FQ2 2023’s results, management highlighted the growth in adoption for its Taegis XDR platform, which crossed the $200 million ARR (Annual Recurring Revenue) mark 14 quarters after launch. Price Target Changed • Sep 03
Price target decreased to US$11.33 Down from US$12.33, the current price target is an average from 3 analysts. New target price is 11% above last closing price of US$10.19. Stock is down 45% over the past year. The company is forecast to post a net loss per share of US$1.31 next year compared to a net loss per share of US$0.48 last year. Reported Earnings • Sep 02
Second quarter 2023 earnings: EPS exceeds analyst expectations Second quarter 2023 results: US$0.29 loss per share (down from US$0.14 loss in 2Q 2022). Revenue: US$116.2m (down 13% from 2Q 2022). Net loss: US$24.7m (loss widened 110% from 2Q 2022). Revenue was in line with analyst estimates. Earnings per share (EPS) surpassed analyst estimates by 12%. Over the next year, revenue is expected to shrink by 4.6% compared to a 16% growth forecast for the Software industry in the US. Over the last 3 years on average, earnings per share has fallen by 22% per year but the company’s share price has only fallen by 12% per year, which means it has not declined as severely as earnings. Price Target Changed • Aug 16
Price target decreased to US$12.25 Down from US$13.70, the current price target is an average from 4 analysts. New target price is 21% above last closing price of US$10.14. Stock is down 43% over the past year. The company is forecast to post a net loss per share of US$1.32 next year compared to a net loss per share of US$0.48 last year. Recent Insider Transactions • Jul 01
Insider recently bought US$484k worth of stock On the 28th of June, Neil Gagnon bought around 43k shares on-market at roughly US$11.18 per share. This was the largest purchase by an insider in the last 3 months. Insiders have collectively bought US$715k more in shares than they have sold in the last 12 months. Reported Earnings • Jun 03
First quarter 2023 earnings: EPS exceeds analyst expectations First quarter 2023 results: US$0.26 loss per share (down from US$0.078 loss in 1Q 2022). Revenue: US$121.0m (down 13% from 1Q 2022). Net loss: US$21.6m (loss widened 238% from 1Q 2022). Revenue was in line with analyst estimates. Earnings per share (EPS) surpassed analyst estimates by 16%. Over the next year, revenue is expected to shrink by 5.8% compared to a 29% growth forecast for the industry in the US. Over the last 3 years on average, earnings per share has fallen by 9% per year whereas the company’s share price has fallen by 4% per year. Price Target Changed • Apr 27
Price target decreased to US$13.70 Down from US$16.40, the current price target is an average from 5 analysts. New target price is 23% above last closing price of US$11.11. Stock is down 18% over the past year. The company is forecast to post a net loss per share of US$1.26 next year compared to a net loss per share of US$0.48 last year. Major Estimate Revision • Mar 24
Consensus EPS estimates fall by 143% The consensus outlook for earnings per share (EPS) in 2023 has deteriorated. 2023 revenue forecast decreased from US$532.8m to US$483.4m. Losses expected to increase from US$0.52 per share to US$1.26. Software industry in the US expected to see average net income growth of 7.0% next year. Consensus price target down from US$16.40 to US$13.70. Share price rose 5.2% to US$13.51 over the past week. Price Target Changed • Mar 18
Price target decreased to US$15.20 Down from US$16.50, the current price target is an average from 5 analysts. New target price is 34% above last closing price of US$11.31. Stock is down 16% over the past year. The company is forecast to post a net loss per share of US$0.57 next year compared to a net loss per share of US$0.27 last year.