Shares of Secureworks Inc. climbed more than 4% today after the company reported that its Taegis cybersecurity platform experienced strong revenue growth in the fourth quarter.
Atlanta-based Secureworks is a major provider of cybersecurity software and services. Its flagship offering is the Taegis platform, which includes two software tools for detecting breach attempts and vulnerabilities. It also includes a managed cybersecurity service that allows companies to have Secureworks protect their networks on their behalf.
Secureworks’ revenue declined to $115.3 million in the fourth quarter from $127.9 million a year earlier. Nevertheless, the company’s sales topped the Zacks consensus estimate by more than 6%. It attributed the revenue drop to its ongoing effort to shift away from “nonstrategic service offerings” and refocus the Taegis platform.
Revenue from Taegis jumped 106% year-over-year, to $60.2 million, in the fourth quarter. More than 400 new customers signed up for the platform. According to Secureworks, Taegis now accounts for 82% of its annualized recurring revenue.
“Taegis enables organizations to secure business assets more cost effectively by automating security operations at a high return on investment,” said Chief Executive Officer Wendy Thomas. “Our XDR platform powers industry-leading MDR capabilities through our partner ecosystem, and our superior security outcomes are resonating with the market as demonstrated by a three-year compound annual growth rate of 156%.”
Secureworks’ ongoing effort to refocus its growth strategy on Taegis impacted its bottom line in the fourth quarter. The company posted an adjusted net loss of $14.3 million, down from an adjusted income of $2.6 million a year earlier. Nevertheless, it topped earnings expectations: It generated an adjusted loss of 17 cents per share while the Zacks consensus estimate projected 27 cents per share.
The company expects to continue operating in the red for the foreseeable future. Its internal estimates project an adjusted loss of 31 to 33 cents per share for the first quarter. However, the company expects to end the current fiscal year “near break-even” and is planning to achieve positive earnings before interest, taxes, depreciation and amortization the year after that.
Secureworks also anticipates that demand for its Taegis platform will continue growing. In the current quarter, the company sees revenue from Taegis increasing to between $96 million and $98 million. The platform’s annual recurring revenue, in turn, is expected to reach $300 million during the current fiscal year.
Secureworks is actively investing in product development to support its sales momentum.
A core component of the company’s Taegis platform is Taegis XDR, a security application that helps enterprises detect and block breach attempts. The most recent update for the application was announced a few hours before it released its fourth-quarter earnings.
The update introduced a new tool called the Security Posture Dashboard for Taegis XDR. According to Secureworks, the tool provides the ability to compare a company’s breach prevention efforts with other organizations’ cybersecurity programs. Administrators can use the feature to identify ways that network defenses can be improved.