SecureWorks Corp (SCWX) Reports Q3 Fiscal 2024 Earnings: Taegis Drives Growth Amidst Strategic Shift
Taegis annual recurring revenue (ARR) up by 25% year-over-year, reaching $279 million.
Overall Q3 revenue declined to $89.4 million from $110.9 million in Q3 FY2023 due to strategic wind-down of Other MSS business.
GAAP net loss improved to $14.4 million, or $0.17 per share, from a net loss of $28.1 million, or $0.33 per share, in the prior year.
Adjusted EBITDA loss narrowed to $1.2 million from $17.2 million year-over-year.
On December 7, 2023, SecureWorks Corp (NASDAQ:SCWX) released its 8-K filing, detailing the financial results for the third quarter of fiscal year 2024, which ended on November 3, 2023. The company, a global leader in cybersecurity, highlighted the growth of its Taegis platform, which saw a significant increase in annual recurring revenue and gross margins.
Financial Performance Overview
SecureWorks Corp (NASDAQ:SCWX) reported a total revenue of $89.4 million for the third quarter, a decrease from the $110.9 million reported in the same quarter of the previous fiscal year. This decline was attributed to the strategic wind-down of the company's Other MSS business. Despite the overall revenue dip, the Taegis segment demonstrated robust growth, with its revenue surging 41% year-over-year to $67.3 million.
The company's GAAP gross profit was $54.7 million, down from $65.4 million in Q3 FY2023. However, the GAAP gross margin improved to 61.3% from 58.9% in the prior year, reflecting the company's enhanced operational efficiency. The non-GAAP gross margin also saw an uptick, reaching 66.3% compared to 63.3% in the same period last year.
SecureWorks Corp (NASDAQ:SCWX) narrowed its GAAP net loss to $14.4 million, or $0.17 per share, compared to a net loss of $28.1 million, or $0.33 per share, in Q3 FY2023. The non-GAAP net loss was reported at $0.0 million, or $0.00 per share, a significant improvement from the non-GAAP net loss of $13.7 million, or $0.16 per share, in the previous year.
Operational and Strategic Highlights
CEO Wendy Thomas commented on the company's performance, stating,
Our Taegis business is consistently delivering market-leading growth and Q3 was no exception. We expanded the breadth and depth of our Partner ecosystem, and recognition within the analyst community for our leadership in the XDR market accelerated."
She emphasized the foundation laid for long-term Taegis growth through new product capabilities and an enriched partner experience.
Chief Financial Officer Alpana Wegner expressed confidence in reaching the breakeven adjusted EBITDA milestone in the fourth quarter, highlighting the scalability of the Taegis platform and the use of AI in driving operational efficiencies.
Future Outlook and Guidance
For the fourth quarter of fiscal 2024, SecureWorks Corp (NASDAQ:SCWX) expects revenue between $86 million and $88 million, with a GAAP net loss per share of $0.16 to $0.18 and a non-GAAP net loss per share of $0.03 to $0.05. The company also updated its full-year fiscal 2024 guidance, projecting Taegis ARR of $280 million or greater, total revenue between $363 million and $365 million, and a GAAP net loss of $91 million to $93 million.
The company's balance sheet showed $58.1 million in cash and cash equivalents at the end of the third quarter. The condensed consolidated statements of cash flows indicated a net cash used in operating activities of $74.494 million for the nine months ended November 3, 2023.
SecureWorks Corp (NASDAQ:SCWX) continues to focus on its Taegis platform, which is gaining traction in the cybersecurity market. The company's strategic decisions and operational efficiencies are paving the way for improved financial performance and a path to profitability.
For a detailed analysis of SecureWorks Corp (NASDAQ:SCWX)'s financials, readers are encouraged to review the full earnings report and the accompanying financial statements.
Explore the complete 8-K earnings release (here) from SecureWorks Corp for further details.
This article first appeared on GuruFocus.
