SecureWorks Stock Drops After Q1 Earnings: Here's Why

SecureWorks Corp SCWX reported a first-quarter FY23 revenue decline of 22% year-on-year to $94.4 million, missing the consensus of $97.5 million.

SecureWorks Taegis posted $269 million in annual recurring revenue (ARR). Taegis ARR grew 49% Y/Y.

Segments: Subscription revenue declined 18.2% Y/Y to $77.3 million. Professional Services revenue decreased by 35.6% Y/Y to $17.1 million.

The non-GAAP gross margin declined by 320 bps to 59.9%.

Non-GAAP EPS loss of $(0.20) missed the consensus loss of $(0.15).

SecureWorks held $94.5 million in cash and equivalents.

"Our holistic approach, combined with our open XDR strategy, drives better security outcomes for customers, as reflected in the continued strong momentum in Taegis this quarter," said Wendy Thomas, CEO, SecureWorks. "Our ongoing use of AI and automation helps Taegis achieve the most effective and efficient detection and response for our customers."

Outlook: SecureWorks sees Q2 FY24 revenue of $90 million - $92 million (consensus $95.92 million) and non-GAAP EPS loss of $(0.15) - $(0.17) (consensus loss of $(0.1)).

SecureWorks reiterated its FY24 revenue outlook of $380 million - $400 million (consensus $390.75 million). It sees a non-GAAP EPS loss of $(0.34) - $(0.43) versus prior $(0.35) - $(0.26) (consensus loss $(0.33)).

Price Action: SCWX shares are trading lower by 2.87% at $7.78 premarket on the last check Thursday.