Secureworks, a leading global cybersecurity company that protects organizations in the digitally connected world, announced financial results for its first quarter ended May 4, 2018.

“We had a strong start to the year with first quarter revenue and MRR each up 11 percent and with sales continuing its momentum. The global demand for our solutions continues to be large and growing. As a global leader, we are well positioned to succeed in the rapidly evolving cybersecurity space,” said Michael R. Cote, Chief Executive Officer of Secureworks.

“Our business model combines the power of years of historical attack data, our knowledge of the threat actors and technology including our algorithms to create a “network effect” delivering solutions to protect our clients. Our focus is on execution — on development efforts to bring innovative, technology-driven solutions to the market, on increasing velocity and impact for our clients through automation and on productivity initiatives across the organization,” continued Mr. Cote. “I am excited about our progress so far this year delivering results for our clients, as well as the progress we are making in executing against our strategic objectives.”

Business and operational developments for the first quarter of fiscal 2019 include:

• The annual value of closed deals in the first quarter increased 50 percent year over year and the total value of closed deals greater than $1 million increased 94 percent over the first quarter of fiscal 2018.

• The Company recently launched a new pricing model for its Managed Detection and Response solution. The MDR solution is a comprehensive solution that pinpoints real security threats, speeds investigation and provides context to improve response. The flexible, scalable pricing further improves our MDR offering to ensure that a coordinated defense continues across all key attack surfaces as the client organization grows.

First Quarter Fiscal 2019 Financial Results Highlights

• Revenue increased 11.0 percent to $126.2 million in the first quarter of fiscal 2019, from $113.7 million in the same period last year. Non-GAAP revenue increased 10.8 percent to $126.2 million from $113.8 million in the first quarter of fiscal 2018.

• Gross margin was 52.0 percent in the first quarter of 2019, compared with 52.8 percent in the same period last year. Non-GAAP gross margin was 54.9 percent compared with 56.1 percent in the first quarter of fiscal 2018.

• Operating loss was $17.6 million compared with $19.0 million in the first quarter of fiscal 2018; non-GAAP operating loss was $5.9 million compared with $8.0 million in the first quarter of last year.

• Net loss was $13.8 million, or $0.17 per share, in the first quarter of fiscal 2019, compared with net loss of $13.3 million, or $0.17 per share, in the prior year. Non-GAAP net loss was $4.5 million, or $0.06 per share, in the first quarter of fiscal 2019, compared with a non-GAAP net loss of $5.5 million, or $0.07 per share, in the same prior year period.

• Adjusted EBITDA loss was $2.6 million, compared to adjusted EBITDA loss of $5.0 million in the first quarter of fiscal 2018.

• Cash used in operating activities for the first quarter of fiscal 2019 was $18.4 million.

• Secureworks ended the first quarter of fiscal 2019 with $77.3 million in cash and cash equivalents.

• Monthly recurring revenue as of May 4, 2018 increased 11.4 percent to $35.5 million from $31.9 million as of May 5, 2017. The Company’s monthly recurring revenue metric represents the monthly value of its subscription contracts, including operational backlog, as of period end.

Second Quarter and Full Fiscal Year 2019 Guidance

Secureworks provides guidance based on current market conditions and expectations. The guidance ranges provided below reflect adoption of ASC 606 and ASC 340-40, effective in the first quarter of fiscal 2019. The Company has posted historical, unaudited information related to the impact of adopting these standards on the investor section of its website.

For the second quarter of fiscal 2019 the Company expects:

• Revenue of $127 to $128 million on both a GAAP and non-GAAP basis.

• Net loss per share of $0.16 to $0.17 and non-GAAP net loss per share of $0.05 to $0.06.

Based on first quarter fiscal 2019 performance and current business trends, the Company has updated its guidance for the full fiscal year 2019. The Company now expects:

• GAAP and non-GAAP revenue of $515 to $518 million.

• Net loss of $48 to $51 million and $0.59 to $0.63 on a per share basis. The increased net loss and net loss per share are primarily attributable to a lower tax benefit rate now anticipated for fiscal 2019 of approximately 22 percent.

• Non-GAAP net loss per share of $0.15 to $0.19.

• Adjusted EBITDA loss of $3 to $7 million.

• Monthly recurring revenue of $38 to $39 million, at the end of the fourth quarter of fiscal 2019.

• Cash flow from operations of $15 to 20 million.