Secureworks^® (NASDAQ: SCWX), a global leader in cybersecurity, today announced financial results for its third quarter fiscal 2025, which ended on November 1, 2024.

Key Highlights

• Taegis™ third quarter revenue grew 6% year-over-year to $71.4 million.
• Total annual recurring revenue (ARR) grew to $288.8 million, an increase of 4% on a year-over-year basis.
• Taegis GAAP gross margin and non-GAAP gross margin continued to expand year-over-year in the third quarter, reaching 72% and 75%, respectively.

"With a 30% rise in active ransomware groups year over year, and a continually evolving threat landscape, we are steadfast in our commitment to deliver unmatched value to customers and partners," said Wendy Thomas, CEO, Secureworks. "This quarter, we continued to innovate and expand the Taegis platform to help customers reduce organizational risk and strengthen their security posture. We look forward to closing the transaction with Sophos in early 2025 and coming together to deliver exceptional security solutions to our combined customers (subject to customary closing conditions)."

Third Quarter Fiscal 2025 Financial Highlights

• Taegis revenue for the third quarter was $71.4 million, compared to $67.3 million in the third quarter of fiscal 2024.

• Total revenue for the third quarter was $82.7 million, compared to $89.4 million in the third quarter of fiscal 2024, reflecting the strategic wind-down of our legacy Other MSS business, which was completed at the end of Q1 FY25.

• GAAP gross profit specific to Taegis was $51.5 million, compared with $47.4 million in the third quarter of fiscal 2024. Non-GAAP Taegis gross profit was $53.5 million, compared with $48.9 million during the same period last year.

• GAAP gross profit was $56.1 million, compared with $54.7 million in the third quarter of fiscal 2024. Non-GAAP gross profit was $58.4 million, compared with $59.2 million during the same period last year.

• GAAP Taegis gross margin was 72.2% for the quarter, compared with 70.4% in the same period last year. Non-GAAP Taegis gross margin was 74.9%, compared with 72.7% in the third quarter of fiscal 2024.

• GAAP gross margin for the third quarter was 67.8%, compared with 61.3% in the same period last year. Non-GAAP gross margin was 70.6%, compared with 66.3% in the third quarter of fiscal 2024.

• GAAP net loss was $27.5 million for the third quarter, or $0.31 per share, compared with GAAP net loss of $14.4 million, or $0.17 per share, in the same period last year.

• Non-GAAP net income was $0.2 million, or $0.00 per share, compared with non-GAAP net loss of $0.0 million, or $0.00 per share, in the same period last year.

• Adjusted EBITDA for the quarter was $1.4 million, compared with adjusted EBITDA loss of $1.2 million in the third quarter of fiscal 2024, representing an adjusted EBITDA margin of 1.7%.

• The company ended the third quarter with $53.1 million in cash and cash equivalents and no borrowings on its credit facility.

Business and Operational Highlights

• Hosted 9^th annual Global Threat Intelligence Summit and published Secureworks State of the Threat Report for 2024 to arm security community with latest intelligence

• Launched Taegis ManagedXDR Plus and Taegis ManagedXDR Elite in Japan to proactively elevate cybersecurity maturity globally

• Secureworks Taegis NDR recognized as Best Network Security Solution in the 2024 Tech Ascension Awards

• Named a Finalist in coveted Top InfoSec Innovator Awards for 2024

• Named a Global Technology Leader for MDR in 2024 QKS Group Spark Matrix™

Recent Developments

On October 21, 2024, we issued a joint press release with Sophos Inc. ("Sophos") announcing that the companies have entered into a definitive agreement (the "Merger Agreement") for Sophos to acquire Secureworks (the "Merger"), subject to the terms and conditions set forth in the Merger Agreement. Details regarding the Merger Agreement and the Merger can be found in our Form 8-K filed with the SEC on October 21, 2024 and the press release issued jointly with Sophos on October 21, 2024.

Business Outlook

As a result of the proposed transaction with Sophos, Secureworks is suspending financial guidance for the fourth quarter and fiscal year 2025. As previously announced, Secureworks will not hold an earnings conference call for the third quarter of fiscal year 2025.

About Secureworks