Secureworks, a leading global cybersecurity company that protects organizations in the digitally connected world, announced financial results for its third quarter ended November 2, 2018.

“We had a strong third quarter, with revenue growth of 13.6 percent and continued improvements in our operating leverage. I am pleased with our progress and remain excited about the significant opportunities for further growth and productivity enhancements as we continue executing against our objectives,” said Michael R. Cote, Chief Executive Officer of Secureworks.

“Amidst a constantly evolving threat landscape and increasingly complex technology ecosystems, we continue to bring intelligence-driven, software-enabled solutions to the market, delivering integrated visibility and effective security for our customers,” continued Mr. Cote.

Business and operational highlights for the third quarter of fiscal 2019 include:

• International revenue increased 51 percent year over year.

  • Revenue in EMEA increased 47 percent over the prior year, with the company recently recognized by Forrester as a Leader in its Managed Security Services Providers, Europe report.

  • Revenue in Asia/Pacific increased 65 percent year over year.

• The company was recognized as a Leader in the IDC MarketScape: U.S. Incident Readiness, Response and Resiliency Services 2018 Vendor Assessment. The company continues to expand this important offering -- recently including it within its Managed Detection and Response (MDR) package -- and has performed over 1,000 incident response engagements over the last twelve months.

• The company has added industry leaders CrowdStrike and Carbon Black to its Red Cloak Partner Program. The Program expands the scope of Secureworks' endpoint visibility so threats observed across different products and organizations can be transformed into effective threat intelligence and threat indicators that help detect adversaries across customers.

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Third Quarter Fiscal 2019 Financial Results Highlights

• GAAP revenue increased 13.6 percent to $133.1 million in the third quarter of fiscal 2019, from $117.1 million in the same period last year. Non-GAAP revenue increased 13.5 percent to $133.1 million from $117.2 million in the third quarter of fiscal 2018.

• GAAP gross margin was 53.3 percent in the third quarter of fiscal 2019, compared with 52.8 percent in the same period last year. Non-GAAP gross margin was 56.0 percent compared with 55.9 percent in the third quarter of fiscal 2018.

• GAAP net loss was $3.7 million, or $0.05 per share, in the third quarter of fiscal 2019, compared with GAAP net loss of $9.4 million, or $0.12 per share, in the prior year. Non-GAAP income was $5.2 million, or $0.06 per share, in the third quarter of fiscal 2019, compared with a non-GAAP net loss of $3.0 million, or $0.04 per share, in the same prior year period.

• Adjusted EBITDA was $8.6 million, compared with an adjusted EBITDA loss of $1.0 million in the third quarter of fiscal 2018.

• Cash provided by operating activities for the three months ended November 2, 2018 was $15.2 million.

• During the third quarter of fiscal 2019, the Company purchased 71 thousand shares of its Class A common stock for $1.1 million, under its existing $15 million stock repurchase authorization.

• Secureworks ended the third quarter of fiscal 2019 with $115.8 million in cash and cash equivalents.

• Monthly recurring revenue as of November 2, 2018 increased 5.1 percent to $35.1 million from $33.4 million as of November 3, 2017. The Company’s monthly recurring revenue metric represents the monthly value of its subscription contracts, including operational backlog, as of period end.

Fourth Quarter and Full Fiscal Year 2019 Guidance

For the fourth quarter of fiscal 2019, the Company expects:

• Revenue of $132 to $133 million on both a GAAP and non-GAAP basis.

• GAAP net loss per share of $0.11 to $0.12 and non-GAAP earnings per share of $0.00 to $0.01.

Based on third 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 $520 to $521 million.

• GAAP net loss of $36 to $37 million and $0.45 to $0.46 on a per share basis.

• Non-GAAP loss per share of $0.00 to $0.01.

• Adjusted EBITDA of $11 to $12 million.

• Monthly recurring revenue of $35.0 to $36.5 million, at the end of the fourth quarter of fiscal 2019.

• Cash flow from operations of $45 to $50 million.

Full Fiscal Year 2020 Guidance

Based on third quarter year to date fiscal 2019 performance and current business trends, the Company is introducing full year fiscal 2020 GAAP and non-GAAP revenue estimates of $565 to $575 million.