Why Cybersecurity Company SecureWorks Shares Are Seeing Blue Skies Today

SecureWorks Corp. SCWX shares are trading higher after it reported first-quarter FY25 results.

Revenue of $85.652 million beat the consensus of $84.198 million. Revenue fell year-over-year reflecting the strategic wind-down of the legacy Other MSS business.

Taegis revenue grew 10% Y/Y to $69.1 million, and annual recurring revenue (ARR) rose 7% Y/Y to $287 million. Taegis adjusted gross margin expanded to 74.3% from 70.0% a year ago.

Adjusted EBITDA stood at $5.6 million vs. loss of $20.1 million in the first quarter of fiscal 2024, exceeding guidance and representing an adjusted EBITDA margin of 6.6%.

Adjusted EPS of $0.05 surpassed the consensus loss of $0.01.

The company ended the quarter with $47.0 million in cash and cash equivalents and no borrowings on its credit facility.

Outlook: SecureWorks expects second-quarter revenue of $80 million-$82 million versus $81.197 million estimate and adjusted EPS of $0.00-$0.02 versus $0.00 estimate.

SecureWorks still projects FY25 revenue of $325 million-$335 million versus the $330.096 million consensus. The company sees adjusted EPS of $0.05-$0.11 (prior view $0.00 – $0.08) versus the street view of $0.03. It continues to anticipate an ARR of $300 million or greater in FY25.

Alpana Wegner, Chief Financial Officer, said, “The continued expansion of our Taegis gross margin reflects our ongoing focus on operational efficiencies driven by our investments in AI and unique cloud architecture, while delivering strong security outcomes to our customers.”

Price Action: SCWX shares are up 16.9% at $6.84 at the last check Thursday.

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