SecureWorks (SCWX) Q3 2025 earnings summary

Executive summary

• Q3 FY2025 net revenue was $82.7M, down 7.4% year-over-year, with Taegis revenue up 6% to $71.4M and ARR up 4% to $288.8M.

• Net loss for the quarter was $27.5M, up from $14.4M last year, mainly due to higher tax expense and merger costs.

• The company completed the exit from non-strategic Managed Security Services and is transitioning to higher-margin Taegis solutions.

• Secureworks entered a definitive merger agreement with Sophos, expected to close in early 2025.

Financial highlights

• Q3 FY2025 net revenue declined 7.4% year-over-year to $82.7M; nine-month revenue was $250.6M.

• GAAP gross profit was $56.1M (67.8% margin), up from $54.7M; non-GAAP gross profit was $58.4M.

• Net loss widened to $27.5M ($0.31/share) from $14.4M ($0.17/share) year-over-year.

• Adjusted EBITDA for the quarter was $1.4M, up from a $(1.2)M loss last year.

• Ended the quarter with $53.1M in cash and no borrowings.

Outlook and guidance

• Management expects the focus on Taegis and recent reorganization to drive cost savings and margin improvement.

• Financial guidance for Q4 and FY25 is suspended due to the pending Sophos acquisition.

• Sufficient liquidity is anticipated for at least 12 months, with $53.1M in cash and a $50M undrawn credit facility.