SecureWorks Corp. (SCWX) Misses Q1 EPS by 2c, Beats on Revenues; Offers Positive FY18 EPS Guidance

SecureWorks Corp. (NASDAQ: SCWX) reported Q1 EPS of ($0.08), $0.02 worse than the analyst estimate of ($0.06). Revenue for the quarter came in at $114 million versus the consensus estimate of $111.77 million.

GUIDANCE:

SecureWorks Corp. sees FY2018 EPS of ($0.30)-($0.33), versus the consensus of ($0.19). SecureWorks Corp. sees FY2018 revenue of $459-464 million, versus the consensus of $461.84 million.

First Quarter Fiscal 2018 Financial Results Highlights

• Revenue increased 13.8 percent to $113.6 million from $99.8 million in the first quarter of fiscal 2017. Non-GAAP revenue increased 13.7 percent to $113.7 million from $100.0 million in the first quarter of fiscal 2017.
• Gross margin was 52.5 percent, up from 50.0 percent in the first quarter of fiscal 2017. Non-GAAP gross margin increased to 55.8 percent from 53.6 percent in the first quarter of fiscal 2017. The increase in GAAP and non-GAAP gross margins was due to revenue growth and operational efficiencies as we continued to leverage our global service delivery model.
• Operating loss was $20.4 million; non-GAAP operating loss was $9.4 million.
• Net loss was $14.2 million, or $0.18 per share, compared to a net loss of $11.6 million, or $0.17 per share, in the first quarter of fiscal 2017. Non-GAAP net loss was $6.5 million, or $0.08 per share, compared to a non-GAAP net loss of $6.1 million, or $0.09 per share, in the first quarter of fiscal 2017.
• Adjusted EBITDA loss was $6.4 million, compared to an adjusted EBITDA loss of $7.6 million in the first quarter of fiscal 2017.
• The number of weighted average shares outstanding during the first quarter was approximately 80.056 million.
• Monthly recurring revenue as of May 5, 2017 increased 10.4 percent to $31.9 million from $28.9 million as of May 1, 2016. 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 2018 Guidance

Based on current market conditions, first quarter performance and the continued investment in its sales organization, the Company expects the following results for the second quarter and full fiscal year ending on February 2, 2018:

For the second quarter, the Company expects:

• Revenue to be in the range of $113 to $114 million on both a GAAP and non-GAAP basis.
• Net loss per share to be in the range of $0.17 to $0.18 and non-GAAP net loss per share to be in the range of $0.08 to $0.09.
• Approximately 80.353 million weighted average shares outstanding during the second quarter of fiscal 2018.

For fiscal year 2018, the Company expects the following results, updating previously announced full year guidance:

• Revenue to be in the range of $459 to $464 million. Non-GAAP revenue to be in the range of $460 to $465 million.
• Net loss to be in the range of $53 to $55 million and adjusted EBITDA loss to be in the range of $24 to $28 million.
• Net loss per share to now be in the range of $0.66 to $0.69 and non-GAAP net loss per share to be in the range of $0.30 to $0.33.
• Approximately 80.286 million weighted average shares outstanding during fiscal year 2018.
• Capital expenditures to be approximately $18 to $20 million.
• Monthly recurring revenue to be in the range of $34.4 to $36.4 million at the end of the fourth quarter of fiscal 2018.

Highlights

• Revenue increased 14 percent year-over-year to $114 million.
• Gross margin increased 250 basis points over last year; non-GAAP gross margin increased 220 basis points over last year.
• The Company made significant investments in its sales organization to address the market opportunity and accelerate momentum in the second half of fiscal 2018.

For earnings history and earnings-related data on SecureWorks Corp. (SCWX) click here.

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