SecureWorks (SCWX) Q1 2025 earnings summary

Executive summary

• Completed transition to a product-led SaaS business, with Taegis revenue up 10% year-over-year to $69.1M and ARR reaching $287M–$287.5M, serving about 2,000 customers.

• Q1 FY25 total revenue was $85.7M–$86M, down 9% year-over-year, reflecting the wind-down of legacy business lines.

• Non-GAAP net income was $4.2M ($0.05/share), compared to a non-GAAP net loss of $17.1M ($0.20/share) last year.

• GAAP net loss was $36.1M–$36M ($0.41/share), impacted by a $26.2M non-cash tax expense from deconsolidation with Dell.

• Recognized as an industry leader in MDR and AI innovation, with multiple analyst accolades and awards.

Financial highlights

• Q1 FY25 total revenue was $85.7M–$86M, above guidance, with subscription revenue at $69.1M–$72.2M and professional services at $13.4M.

• Gross margin improved to 67.5% GAAP and 69.9% non-GAAP, up from 54.7% and 59.9% year-over-year.

• Adjusted EBITDA was $5.6M–$6M, a significant improvement from a loss of $20.1M–$26M last year.

• Average revenue per Taegis customer rose 10% to $145,000, above industry average.

• Cash at quarter end: $47M, no debt, and a $50M undrawn credit facility.

Outlook and guidance

• Q2 FY25 revenue expected at $80M–$82M; adjusted EBITDA $1M–$3M; non-GAAP EPS $0.00–$0.02.

• FY25 guidance: ARR ≥ $300M, revenue $325M–$335M, total gross margin 68%, Taegis gross margin 74%, adjusted EBITDA $6M–$12M, non-GAAP EPS $0.03–$0.09, cash flow from operations between -$2M and +$8M.