Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 03, 2017 | Mar. 27, 2017 | Jul. 29, 2016 | |
Document Information [Line Items] | |||
Entity Registrant Name | SECUREWORKS CORP. | ||
Entity Central Index Key | 1,468,666 | ||
Current Fiscal Year End Date | --02-03 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Feb. 3, 2017 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | Q4 | ||
Amendment Flag | false | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 144.3 | ||
Common Stock, Class A | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding (in shares) | 10,566,149 | ||
Common Stock, Class B | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding (in shares) | 70,000,000 |
Consolidated Statements of Fina
Consolidated Statements of Financial Position - USD ($) $ in Thousands | Feb. 03, 2017 | Jan. 29, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 116,595 | $ 33,422 |
Accounts receivable, net | 113,546 | 116,357 |
Inventories, net | 1,947 | 3,549 |
Other current assets | 51,947 | 26,211 |
Total current assets | 284,035 | 179,539 |
Property and equipment, net | 31,153 | 22,766 |
Goodwill | 416,487 | 416,487 |
Purchased intangible assets, net | 261,921 | 289,657 |
Other non-current assets | 5,704 | 9,336 |
Total assets | 999,300 | 917,785 |
Current liabilities: | ||
Accounts payable | 24,119 | 22,126 |
Accrued and other | 59,704 | 60,407 |
Short-term deferred revenue | 119,909 | 109,467 |
Short-term debt | 0 | 27,993 |
Total current liabilities | 203,732 | 219,993 |
Long-term deferred revenue | 14,752 | 18,352 |
Other non-current liabilities | 89,392 | 90,984 |
Total liabilities | 307,876 | 329,329 |
Commitments and contingencies (Note 6) | ||
Stockholders' equity: | ||
Preferred stock - $0.01 par value: 200,000 shares authorized; 0 shares issued | 0 | 0 |
Additional paid in capital | 854,907 | 711,923 |
Accumulated deficit | (160,859) | (122,646) |
Accumulated other comprehensive loss | (3,431) | (1,521) |
Total stockholders' equity | 691,424 | 588,456 |
Total liabilities and stockholders' equity | 999,300 | 917,785 |
Common Stock, Class A | ||
Stockholders' equity: | ||
Common stock, Class A and Class B, $.01 par value | 107 | 0 |
Common Stock, Class B | ||
Stockholders' equity: | ||
Common stock, Class A and Class B, $.01 par value | $ 700 | $ 700 |
Consolidated Statements of Fin3
Consolidated Statements of Financial Position (Parenthetical) - $ / shares | Feb. 03, 2017 | Jan. 29, 2016 |
Preferred stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Preferred Stock, shares issued (in shares) | 0 | 0 |
Common Stock, Class A | ||
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 2,500,000,000 | 2,500,000,000 |
Common stock, shares issued (in shares) | 10,566,000 | |
Common stock, shares outstanding (in shares) | 10,566,000 | |
Common Stock, Class B | ||
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 70,000,000 | 70,000,000 |
Common stock, shares outstanding (in shares) | 70,000,000 | 70,000,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Feb. 03, 2017 | Jan. 29, 2016 | Jan. 30, 2015 | |
Income Statement [Abstract] | |||
Net revenue | $ 429,502 | $ 339,522 | $ 262,130 |
Cost of revenue | 212,599 | 183,809 | 144,846 |
Gross margin | 216,903 | 155,713 | 117,284 |
Research and development | 71,030 | 69,598 | 45,092 |
Sales and marketing | 124,950 | 111,978 | 85,046 |
General and administrative | 86,876 | 80,145 | 48,239 |
Total operating expenses | 282,856 | 261,721 | 178,377 |
Operating loss | (65,953) | (106,008) | (61,093) |
Interest and other, net | 2,476 | (6,569) | (142) |
Loss before income taxes | (63,477) | (112,577) | (61,235) |
Income tax benefit | (25,264) | (40,196) | (22,745) |
Net loss | $ (38,213) | $ (72,381) | $ (38,490) |
Net loss per common share, basic and diluted (usd per share) | $ (0.49) | $ (1.03) | $ (0.55) |
Weighted average common shares outstanding, basic and diluted (in shares) | 77,635 | 70,000 | 70,000 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2017 | Jan. 29, 2016 | Jan. 30, 2015 | |
Statement of Comprehensive Income [Abstract] | |||
Net loss | $ (38,213) | $ (72,381) | $ (38,490) |
Foreign currency translation adjustments, net of zero tax | (1,910) | (1,496) | 124 |
Comprehensive loss | $ (40,123) | $ (73,877) | $ (38,366) |
Consolidated Statements of Com6
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) | 12 Months Ended | ||
Feb. 03, 2017 | Jan. 29, 2016 | Jan. 30, 2015 | |
Statement of Comprehensive Income [Abstract] | |||
Foreign currency translation adjustment, tax | $ 0 | $ 0 | $ 0 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2017 | Jan. 29, 2016 | Jan. 30, 2015 | |
Statement of Cash Flows [Abstract] | |||
Net loss | $ (38,213) | $ (72,381) | $ (38,490) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 39,425 | 40,638 | 41,425 |
Change in fair value of convertible notes | 132 | 5,493 | 0 |
Stock-based compensation expense | 8,883 | 841 | 785 |
Effects of exchange rate changes on monetary assets and liabilities denominated in foreign currencies | (2,239) | 836 | 137 |
Income tax expense (benefit) | (25,264) | (40,196) | (22,745) |
Other non cash impacts | 0 | 4,792 | 7,202 |
Excess tax benefit from share-based payment | (221) | 0 | 0 |
Provision for doubtful accounts | 2,613 | 4,661 | 768 |
Changes in assets and liabilities: | |||
Accounts receivable | 956 | (52,443) | (24,527) |
Due to / from parent | (15,582) | 21,691 | 0 |
Inventories | 1,610 | (1,179) | (1,389) |
Other assets | (139) | (10,065) | (3,856) |
Accounts payable | 2,041 | 2,311 | 5,570 |
Deferred revenue | 7,185 | 34,591 | 34,275 |
Accrued and other liabilities | 11,975 | 50,567 | 3,077 |
Net cash provided by (used in) operating activities | (6,838) | (9,843) | 2,232 |
Cash flows from investing activities: | |||
Capital expenditures | (19,361) | (9,023) | (9,542) |
Net cash used in investing activities | (19,361) | (9,023) | (9,542) |
Cash flows from financing activities: | |||
Proceeds from initial public offering, net | 99,604 | 0 | 0 |
Capital contribution from parent, net | 9,547 | 0 | 0 |
Excess tax benefit from share-based payment | 221 | 0 | 0 |
Transfers from parent, net | 0 | 24,383 | 11,553 |
Payment of deferred offering costs | 0 | (1,264) | 0 |
Issuance of convertible notes | 0 | 22,500 | 0 |
Net cash provided by financing activities | 109,372 | 45,619 | 11,553 |
Net increase in cash and cash equivalents | 83,173 | 26,753 | 4,243 |
Cash and cash equivalents at beginning of the period | 33,422 | 6,669 | 2,426 |
Cash and cash equivalents at end of the period | 116,595 | 33,422 | 6,669 |
Supplemental Disclosures of Non-Cash Investing and Financing Activities: | |||
Conversion of convertible notes to common stock | 28,125 | 0 | 0 |
Financed capital expenditures | 800 | 0 | 0 |
Income taxes paid | $ 910 | $ 0 | $ 0 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common StockCommon Stock, Class A | Common StockCommon Stock, Class B | Additional Paid in Capital | Accumulated Deficit | Accumulated Other Comprehensive (Loss) Income |
Beginning balance (in shares) at Jan. 31, 2014 | 0 | 70,000 | ||||
Beginning balance at Jan. 31, 2014 | $ 630,328 | $ 0 | $ 700 | $ 641,552 | $ (11,775) | $ (149) |
Statement of Shareholders' Equity | ||||||
Net loss | (38,490) | (38,490) | ||||
Other comprehensive loss | 124 | 124 | ||||
Capital contribution from parent, net | 14,179 | 14,179 | ||||
Stock-based compensation | 785 | 785 | ||||
Ending balance (in shares) at Jan. 30, 2015 | 0 | 70,000 | ||||
Ending balance at Jan. 30, 2015 | 606,926 | $ 0 | $ 700 | 656,516 | (50,265) | (25) |
Statement of Shareholders' Equity | ||||||
Net loss | (72,381) | (72,381) | ||||
Other comprehensive loss | (1,496) | (1,496) | ||||
Capital contribution from parent, net | 54,566 | 54,566 | ||||
Stock-based compensation | 841 | 841 | ||||
Ending balance (in shares) at Jan. 29, 2016 | 0 | 70,000 | ||||
Ending balance at Jan. 29, 2016 | 588,456 | $ 0 | $ 700 | 711,923 | (122,646) | (1,521) |
Statement of Shareholders' Equity | ||||||
Net loss | (38,213) | (38,213) | ||||
Other comprehensive loss | (1,910) | (1,910) | ||||
Issuance of common stock in connection with initial public offering, net of offering costs (in shares) | 8,000 | |||||
Issuance of common stock in connection with initial public offering, net of offering costs | 96,326 | $ 80 | 96,246 | |||
Conversion of convertible notes to common stock in connection with initial public offering (in shares) | 2,009 | |||||
Conversion of convertible notes to common stock in connection with initial public offering | 28,125 | $ 20 | 28,105 | |||
Restricted stock (in shares) | 557 | |||||
Restricted Stock | (11) | $ 6 | (17) | |||
Capital contribution from parent, net | 9,547 | 9,547 | ||||
Stock-based compensation | 8,883 | 8,883 | ||||
Excess tax benefit from share-based payment | 221 | 221 | ||||
Ending balance (in shares) at Feb. 03, 2017 | 10,566 | 70,000 | ||||
Ending balance at Feb. 03, 2017 | $ 691,424 | $ 106 | $ 700 | $ 854,908 | $ (160,859) | $ (3,431) |
Description of the Business and
Description of the Business and Basis of Presentation | 12 Months Ended |
Feb. 03, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of the Business and Basis of Presentation | DESCRIPTION OF THE BUSINESS AND BASIS OF PRESENTATION Description of the Business SecureWorks Corp. (individually and collectively with its consolidated subsidiaries, “SecureWorks” or the “Company”) is a leading global provider of intelligence-driven information security solutions singularly focused on protecting the Company's clients from cyber attacks. The Company's solutions enable organizations of varying size and complexity to fortify their cyber defenses to prevent security breaches, detect malicious activity in near real time, prioritize and respond rapidly to security incidents and predict emerging threats. The Company has one primary business activity, which is to provide clients with intelligence-driven information security solutions. The Company’s chief operating decision maker, who is the President and Chief Executive Officer, makes operating decisions, assesses performance, and allocates resources on a consolidated basis. Accordingly, SecureWorks operates its business as a single reportable segment. On February 8, 2011, the Company was acquired by Dell Inc. (individually and collectively with its consolidated subsidiaries, “Dell” or “Parent”). On October 29, 2013, Dell was acquired by Dell Technologies Inc., formerly known as Denali Holding Inc. (“Dell Technologies”), a parent holding corporation. For the purposes of the accompanying financial statements, the Company elected to utilize pushdown accounting for the acquisition of Dell by Dell Technologies. On April 27, 2016, the Company completed its initial public offering ("IPO"), as further described below. Upon the closing of the IPO, Dell Technologies owned, indirectly through Dell Inc. and Dell Inc.’s subsidiaries, no shares of the Company's outstanding Class A common stock and all shares of the Company's outstanding Class B common stock, which as of February 3, 2017 represented approximately 86.9% of the Company's total outstanding shares of common stock and approximately 98.5% of the combined voting power of both classes of the Company's outstanding common stock. The predecessor company of SecureWorks was originally formed as a limited liability company in Georgia in March 1999, and SecureWorks was incorporated in Georgia in May 2009. On November 24, 2015, the Company reincorporated from Georgia to Delaware and, in connection with the reincorporation, changed its name from SecureWorks Holding Corporation to SecureWorks Corp. and its authorized capital from 1,000 shares of common stock, par value $0.01 per share, to 1,000 shares of Class A common stock and 1,000 shares of Class B common stock, each with a par value of $0.01 per share. There are no differences in dividend and liquidation rights between the Class A common stock and the Class B common stock. Each share of Class A common stock is entitled to one vote and each share of Class B common stock is entitled to ten votes. Upon the reincorporation, the 1,000 issued and outstanding shares of common stock of the Georgia corporation were reclassified into and became 1,000 issued and outstanding shares of Class B common stock of SecureWorks Corp., the Delaware corporation. In January 2016, the Company’s board of directors and stockholder approved a 70,000 -for- 1 stock split of the Company’s Class B common stock. The Company filed an amendment to its certificate of incorporation effecting the stock split on April 8, 2016. The amendment to the certificate of incorporation also increased the number of shares of Class A common stock authorized for issuance from 1,000 to 2,500,000,000 shares and increased the number of shares of Class B common stock authorized for issuance from 1,000 to 500,000,000 shares. All share and per share amounts presented in these financial statements have been retroactively adjusted to reflect the impact of the stock split. In April 2016, the Company’s board of directors and stockholder approved a restated certificate of incorporation further amending and restating the provisions of the certificate of incorporation. The restated certificate of incorporation, which was filed on April 22, 2016, authorized for issuance 200,000,000 shares of preferred stock, par value $0.01 per share. In connection with the IPO, the Company created certain new foreign legal entities that became consolidated subsidiaries of SecureWorks Corp. After their formation and generally effective on August 1, 2015, the carve-out date, the new subsidiaries of SecureWorks Corp. received transfers of net assets from other Dell legal entities of businesses that have been included in the historical combined financial statements of the Company. The net assets were transferred by Dell for no consideration, at their carrying values, which represented Dell’s historical costs and which constitute the basis reflected in these historical combined financial statements. Because these businesses already have been included in the historical combined financial statements for all periods, the sole impact of the transfers was the completion of the legal reorganization of entities under common control and the presentation of the resulting change in the reporting entity under Accounting Standards Codification (“ASC”) 805 – Business Combinations. Because SecureWorks Corp. legally owned all of the businesses reflected in the previously presented combined financial statements as of January 29, 2016, the presentation as of such date is of a consolidated business, with the only effect being the reclassification of the previously reported balances in net parent investment as common stock, additional paid in capital and accumulated deficit of SecureWorks Corp. Initial Public Offering On April 27, 2016, the Company completed its IPO in which it issued and sold 8,000,000 shares of Class A common stock at a price to the public of $14.00 per share. The Company received net proceeds of $99.6 million from the sale of shares of Class A common stock, after deducting underwriting discounts and commissions and unpaid offering expenses payable by the Company of $12.4 million . Upon the closing of the IPO, all of the Company's convertible notes automatically converted into 2,008,924 shares of the Class A common stock. For more information regarding the convertible notes see "Note 5—Debt." Basis of Presentation and Consolidation The Company’s consolidated financial statements have been prepared on a stand-alone basis in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and, for periods prior to the carve-out date, were derived from the accounting records of Dell and the Company, whereby certain transactions are outside SecureWorks Corp. Beginning in the third quarter of fiscal 2016, the costs of these services were charged in accordance with a shared services agreement between the Company and Dell that went into effect on August 1, 2015. The Company’s results of operations, particularly prior to the carve-out date, are not necessarily indicative of its future performance and do not reflect what the Company’s financial performance would have been had it been a stand-alone public company during all periods presented. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s financial statements. The consolidated financial statements include assets, liabilities, revenue and expenses of all majority-owned subsidiaries. Intercompany transactions and balances are eliminated in consolidation. Assets and liabilities that are specifically identifiable or otherwise attributable to the Company, such as intangible assets, are included in the Consolidated Statements of Financial Position. Debt held by Dell, and related interest expense have not been allocated to SecureWorks for any of the periods presented as these borrowings were not directly attributable to the Company’s operations. Cash transfers between the Company and Dell prior to August 1, 2015 have been included in these financial statements as a component of permanent equity, as such amounts do not require repayment. The total net effect of these transfers is reflected in the Consolidated Statements of Financial Position and the Consolidated Statements of Stockholders' Equity as transfers from Parent and in the Consolidated Statements of Cash Flows as a financing activity. For the periods presented, Dell has provided various corporate services to the Company in the ordinary course of business, including finance, tax, human resources, legal, insurance, IT, procurement and facilities-related services. Dell also has provided the Company with the services of a number of its executives and employees. Through the first two quarters of fiscal 2016, the costs of such services were allocated to the Company based on the most relevant allocation method to the service provided, primarily based on relative percentage of total net sales, relative percentage of headcount, or specific identification. Management believes the basis on which the expenses have been allocated to be a reasonable reflection of the utilization of services provided to or the benefit received by the Company during the periods presented. As discussed above, beginning in the third quarter of fiscal 2016, the costs of these services were charged in accordance with the shared services agreement that went into effect on August 1, 2015. For more information regarding the allocated costs and related party transactions, see “Note 10-Related Party Transactions.” During the periods presented in the financial statements, SecureWorks did not file separate federal tax returns, as the Company was generally included in the tax grouping of other Dell entities within the respective entity’s tax jurisdiction. The income tax benefit has been calculated using the separate return method, modified to apply the benefits for loss approach. Under the benefits for loss approach, net operating losses or other tax attributes are characterized as realized or as realizable by SecureWorks when those attributes are utilized or expected to be utilized by other members of the Dell consolidated group. See “ Note 8 —Income and Other Taxes” for more information. Fiscal Year The Company’s fiscal year is the 52 - or 53 -week period ending on the Friday closest to January 31. The Company refers to the fiscal years ending February 3, 2017, January 29, 2016, and January 30, 2015 as fiscal 2017, fiscal 2016, and fiscal 2015, respectively. Fiscal 2017 included 53 weeks, with the extra week included in the fourth quarter, and fiscal 2016 and fiscal 2015 included 52 weeks. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Estimates are revised as additional information becomes available. In the Consolidated Statements of Operations, estimates are used when accounting for revenue arrangements, determining cost of revenue, allocating cost in the form of depreciation and amortization and estimating the impact of contingencies. In the Statements of Financial Position, estimates are used in determining the valuation and recoverability of assets, such as accounts receivables, inventories, fixed assets, goodwill and other identifiable intangible assets, and estimates are used in determining the reported amounts of liabilities, such as taxes payable and the impact of contingencies, all of which also impact the Consolidated Statements of Operations. Actual results could differ from these estimates. Out-of-Period Adjustments The financial statements presented for the fiscal year ended January 29, 2016 include adjustments to correct errors related to the fiscal year ended January 30, 2015. For the fiscal year ended January 29,2016, the out-of-period adjustments increased loss before taxes and net loss by approximately $3.7 million and $2.4 million , respectively. The out-of-period adjustments primarily relate to the timing of services revenue, recognition, cost of sales of hardware equipment sold but not expensed, and compensation expense from fiscal 2015 not recorded. Because management concluded these errors, both individually and in the aggregate, were not material to any of the prior periods’ financial statements, and because the impact of correcting these errors in fiscal 2016 was not material to the financial statements presented, the Company recorded the correction of these errors in its fiscal 2016 financial statements presented in its registration statement on Form S-1 filed in connection with the IPO. Reclassification Certain amounts in prior fiscal years have been reclassified to conform with the presentation in the current fiscal year. See "Note 2—Significant Accounting Policies." |
Significant Accounting Policies
Significant Accounting Policies (Notes) | 12 Months Ended |
Feb. 03, 2017 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | SIGNIFICANT ACCOUNTING POLICIES Cash and Cash Equivalents. As of February 3, 2017 and January 29, 2016 , cash and cash equivalents is comprised of cash held in bank accounts and money market funds. The cash and cash equivalents are reported at their current carrying value, which approximates fair value due to the short-term nature of these instruments. The money market instruments are valued using quoted market prices and are included as Level 1 inputs. Accounts Receivable. Trade accounts receivable are recorded at the invoiced amount, net of allowances for doubtful accounts. Accounts receivable are charged against the allowance for doubtful accounts when deemed uncollectable. Management regularly reviews the adequacy of the allowance for doubtful accounts by considering the age of each outstanding invoice, each customer’s expected ability to pay, and the collection history with each customer, when applicable, to determine whether a specific allowance is appropriate. As of February 3, 2017 and January 29, 2016 , the allowance for doubtful accounts was $6.1 million and $4.5 million , respectively. Unbilled accounts receivable included in accounts receivable, totaling $9.4 million and $10.5 million as of February 3, 2017 and January 29, 2016 , respectively, relate to work that has been performed, though invoicing has not yet occurred. All of the unbilled receivables are expected to be billed and collected within the upcoming year. Fair Value Measurements. The carrying amounts of the Company’s financial instruments, including cash equivalents, accounts receivable, accounts payable and accrued expenses, approximate their respective fair values due to their short-term nature. Inventories. Inventories consist of finished goods, which include hardware devices such as servers, log retention devices, and appliances that are sold in connection with the Company’s multiple-element solutions offerings. Inventories are stated at lower of cost or market, with cost being determined on a first-in, first-out (FIFO) basis. Prepaid Maintenance and Support Agreements. Prepaid maintenance and support agreements represent amounts paid to third-party service providers for maintenance, support and software license agreements in connection with the Company’s obligations to provide maintenance and support services. The prepaid maintenance and support agreement balance is amortized on a straight-line basis over the contract term and is primarily recognized as a component of cost of revenue. Amounts that are expected to be amortized within one year are recorded in other current assets and the remaining balance is recorded in other non-current assets. Property and Equipment. Property and equipment are carried at depreciated cost. Depreciation is calculated using the straight-line method over the estimated economic lives of the assets, which range from two to five years. Leasehold improvements are amortized over the shorter of five years or the lease term. For the fiscal years ended February 3, 2017 , January 29, 2016 , and January 30, 2015 , depreciation expense was $11.7 million , $12.3 million and $11.6 million , respectively. Gains or losses related to retirements or disposition of fixed assets are recognized in the period incurred. Intangible Assets Including Goodwill. Identifiable intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives. Finite-lived intangible assets are reviewed for triggering events on a quarterly basis. Goodwill and indefinite-lived intangible assets are tested for impairment on an annual basis in the third fiscal quarter, or sooner if an indicator of impairment occurs. To determine whether goodwill and indefinite-lived intangible assets are impaired, the Company first assesses certain qualitative factors. Based on this assessment, if it is determined more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company performs the quantitative analysis of the goodwill impairment test. The Company has determined that it has a single goodwill reporting unit, and, accordingly, for the quantitative analysis, it compares the fair value of this goodwill reporting unit to its carrying values. Foreign Currency Translation. During the periods presented, SecureWorks primarily operated in the United States. For the majority of the Company’s international businesses, the Company has determined that the functional currency of those subsidiaries is the local currency. Accordingly, assets and liabilities for these entities are translated at current rates of exchange in effect at the balance sheet date. Revenue and expenses from these international subsidiaries are translated using the monthly average exchange rates in effect for the period in which the items occur. Foreign currency translation adjustments are included as a component of accumulated other comprehensive loss, while foreign currency transaction gains and losses are recognized in the Statements of Operations within interest and other, net. These transaction gains totaled $2.2 million , $0.8 million and $0.1 million in the fiscal years ended February 3, 2017 , January 29, 2016 , and January 30, 2015 , Deferred Offering Costs. Deferred offering costs consisted primarily of direct incremental costs related to the Company’s initial public offering of its common stock. Approximately $4.3 million of deferred offering costs are included in other non-current assets in the Statements of Financial Position as of January 29, 2016, of which approximately $2.0 million of such costs were incurred prior to August 1, 2015 and were paid by Dell. Upon the completion of the initial public offering, these amounts were offset against the proceeds of the offering. Revenue Recognition. SecureWorks derives revenue primarily from two sources: (1) subscription revenue related to managed security and threat intelligence solutions; and (2) professional services, including security and risk consulting and incident response solutions. Revenue is considered realized and earned when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the fee to its customer is fixed or determinable and collection of the resulting receivable is reasonably assured. Multiple-Element Arrangements Professional services contracts are typically sold separately from subscription-based solutions. For subscription offerings, revenue arrangements typically include subscription security solutions, hardware that is essential to the delivery of the service, and maintenance agreements. The nature and terms of these multiple deliverable arrangements will vary based on the customized needs of clients. A multiple-element arrangement is separated into more than one unit of accounting if both of the following criteria are met: ▪ the item has value to the client on a stand-alone basis; and ▪ if the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered item is considered probable and substantially in the Company’s control. If these criteria are not met, the arrangement is accounted for as a single unit of accounting, which would result in revenue being recognized ratably over the contract term or being deferred until the earlier of when such criteria are met or when the last undelivered element is delivered. If these criteria are met for each element, consideration is allocated to the deliverables based on its relative selling price. Subscription-Based Solutions Subscription-based arrangements typically include security solutions, the associated hardware appliance, up-front installation fees and maintenance agreements, which are all typically deferred and recognized over the life of the related agreement. The hardware appliance contains software components that do not provide customers with the right to take possession of software licenses supporting the solutions. Therefore, software is considered essential to the functionality of the associated hardware, and, accordingly, is excluded from the accounting guidance that is specific to the software industry. The Company has determined that the hardware appliance included in the subscription-based solutions arrangements does not have stand-alone value to the customer and is required to access the Company’s Counter Threat Platform. The related maintenance agreements support the associated hardware and similarly do not have stand-alone value to the customer. The related installations fees are non-refundable and also do not have stand-alone value to the customer. Therefore, SecureWorks recognizes revenue for these arrangements as a single unit of accounting. The revenue and any related costs for these deliverables are recognized ratably over the contract term, beginning on the date on which service is made available to clients. Amounts that have been invoiced, but for which the above revenue recognition criteria have not been met, are included in deferred revenue. The Company has determined that it is the primary obligor in any arrangements that include third-party hardware sold in connection with its solutions, and, accordingly, the Company recognizes this revenue on a gross basis. Professional Services Professional services consist primarily of fixed-fee and retainer based contracts. Revenue from these engagements is recognized under the proportional performance method of accounting. Revenue from time and materials-based contracts is recognized as costs are incurred at amounts represented by the agreed-upon billing amounts. The Company reports revenue net of any revenue-based taxes assessed by governmental authorities that are imposed on and concurrently with specific revenue-producing transactions. Deferred Revenue. Deferred revenue represents amounts contractually billed to customers or payments received from customers for which revenue has not yet been recognized. Deferred revenue that is expected to be recognized as revenue within one year is recorded as short-term deferred revenue and the remaining portion is recorded as long-term deferred revenue. Cost of Revenue. Cost of revenue consists primarily of personnel expenses, including salaries, benefits and performance-based compensation for employees who maintain the Counter Threat Platform and provide support services to clients, as well as perform other critical functions. Other expenses include depreciation of equipment and costs associated with maintenance agreements for hardware provided to clients as part of their subscription-based solutions. In addition, cost of revenue includes amortization of technology licensing fees, fees paid to contractors who supplement or support solutions offerings, maintenance fees and overhead allocations. Research and Development Costs. Research and development costs are expensed as incurred. Research and development expenses include compensation and related expenses for the continued development of solutions offerings, including a portion of expenses related to the threat research team, which focuses on the identification of system vulnerabilities, data forensics and malware analysis and product management. In addition, expenses related to the development and prototype of new solutions offerings also are included in research and development costs, as well as allocated overhead. The Company’s solutions offerings have generally been developed internally. Sales and Marketing. Sales and marketing expense includes wages and benefits, sales commissions and related expenses for sales and marketing personnel, travel and entertainment, marketing and advertising programs, including lead generation, client advocacy events, other brand-building expenses, and allocated overhead. Advertising costs are expensed as incurred and were $12.8 million , $13.0 million , and $9.7 million for the fiscal years ended February 3, 2017 , January 29, 2016 , and January 30, 2015 , respectively. General, and Administrative. General and administrative expense primarily includes the costs of human resources and recruiting, finance and accounting, legal support, management information systems and information security systems, facilities management and other administrative functions, offset by allocations of information technology and facilities costs to other functions. Software Development Costs. Qualifying software costs developed for internal use are capitalized when application development begins, it is probable that the project will be completed, and the software will be used as intended. In order to expedite delivery of the Company’s security solutions, the application stage typically commences before the preliminary development stage is completed. Accordingly, no significant software development costs have been capitalized during any period presented. Income Taxes. Current income tax expense is the amount of income taxes expected to be payable for the current year. Deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Operations in the period that includes the enactment date. The Company calculates a provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized by identifying the temporary differences arising from the different treatment of items for tax and accounting purposes. The Company provides valuation allowances for deferred tax assets, where appropriate. In assessing the need for a valuation allowance, SecureWorks considers all available evidence for each jurisdiction, including past operating results, estimates of future taxable income, and the feasibility of ongoing tax planning strategies. In the event SecureWorks determines all or part of the net deferred tax assets are not realizable in the future, it will make an adjustment to the valuation allowance that would be charged to earnings in the period such determination is made. The accounting guidance for uncertainties in income tax prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. The Company recognizes a tax benefit from an uncertain tax position in the financial statements only when it is more likely than not that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits and a consideration of the relevant taxing authority’s administrative practices and precedents. During the periods presented in the financial statements, the Company did not file separate federal tax returns, as the Company was generally included in the tax grouping of other Dell entities within the respective entity’s tax jurisdiction. The income tax benefit has been calculated using the separate return method, modified to apply the benefits for loss approach. Under the benefits for loss approach, net operating losses or other tax attributes are characterized as realized or as realizable by the Company when those attributes are utilized or expected to be utilized by other members of the Dell consolidated group. Commissions. The Company defers certain commission costs that are incremental and directly related to the acquisition of a service contract. When clients pay for one or more years of service in advance, sales commissions are paid 50% in the month subsequent to the execution of the service contract and the remaining 50% over the following 12 months. The Company recognizes the sales commission expense related to the entire contract ratably over the first year of the service contract. During the fiscal years ended February 3, 2017 , January 29, 2016 , and January 30, 2015 , the Company recognized $29.4 million , $29.5 million , and $20.9 million , respectively, in commission expense. All sales commission amounts are recoverable by the Company throughout the first year of a service contract. Therefore, the portion of any sales commissions paid upon the signing of a contract, for which the related sales commission expense has not yet been recognized, is recorded as a prepaid asset and amortized to expense during the first 12 months of the contract. As of February 3, 2017 , January 29, 2016 , and January 30, 2015 , the Company had a prepaid commission balance, included in other current assets, of $1.6 million , $1.9 million and $1.6 million , respectively. The Company typically expenses sales commissions paid to strategic and distribution partners upon entering contracts for the solutions sold and recognize the revenue associated with such sales over the terms of the contracts. Stock-Based Compensation. The Company’s compensation programs include grants under Dell’s share-based payment plans and, since the IPO date, grants under the SecureWorks Corp. 2016 Long-Term Incentive Plan. Compensation expense related to these stock-based transactions is measured and recognized in the financial statements based on fair value. In general, the fair value of each option award is estimated on the grant date using the Black-Scholes option-pricing model and a single option award approach. This model requires that at the date of grant the Company determine the fair value of the underlying common stock, the expected term of the award, the expected volatility, risk-free interest rates, and expected dividend yield. The stock-based compensation expense, net of forfeitures, is recognized using a straight-line basis over the requisite service periods of the awards, which is generally four years. The Company estimates a forfeiture rate, based on an analysis of actual historical forfeitures, to calculate stock-based compensation expense. Loss Contingencies. SecureWorks is subject to the possibility of various losses arising in the ordinary course of business. An estimated loss contingency is accrued when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. The Company regularly evaluates current information available to determine whether such accruals should be adjusted and whether new accruals are required. See “Note 6–Commitments and Contingencies” for more information about these loss contingencies. Reclassification of Operating Expenses presented in previously issued financial statements Beginning in the first quarter of fiscal 2017, the Company began presenting sales and marketing expenses and general and administrative expenses as separate financial statement lines items. Previously, selling, general and administrative were presented on a combined basis. In addition, during the fourth quarter of fiscal 2017, the Company made certain changes to the classification and presentation of operating expenses. The Company determined the changes would provide more meaningful information and increased transparency as they better reflect how management views and operates the business. The changes also better reflect industry practices and align the Company's operating expenses with those of its peers. The reclassifications are being presented retrospectively to make all periods comparable. The following table presents the Company’s operating expenses as previously reported, and as currently reclassified, on its Consolidated Statements of Operations for each of the fiscal years noted below: Fiscal Year Ended January 29, 2016 Fiscal Year Ended January 30, 2015 As As As As Reported Reclassification Reclassified Reported Reclassification Reclassified Statements of Operations Data: Selling, general and administrative $ 211,974 $ (211,974 ) — $ 146,324 $ (146,324 ) — Research and development 49,747 19,851 69,598 32,053 13,039 45,092 Sales and marketing — 111,978 111,978 — 85,046 85,046 General and administrative — 80,145 80,145 — 48,239 48,239 Total operating expenses $ 261,721 $ — $ 261,721 $ 178,377 $ — $ 178,377 The reclassifications to research and development expenses primarily relate to the transfer of the product management group to research and development, development costs of enhancing existing product technology for the Counter Threat Platform by improving security, performance and functionality as well as overhead allocations related to technology costs and facilities. See “Note 11—Unaudited Quarterly Results of Operations” for the impact of these reclassifications on the previously issued quarterly financial statements. Recently Issued Accounting Pronouncements Intangibles - Goodwill and Other. In January 2017, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update ("ASU") 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates Step 2 of the goodwill impairment test, which required the Company to determine the implied fair value of goodwill by allocating the reporting unit's fair value to each of its assets and liabilities as if the reporting unit was acquired in a business acquisition. Instead, the updated guidance requires an entity to perform its annual or interim goodwill impairment test by comparing the fair value of the reporting unit to its carrying value, and recognizing a non-cash impairment charge for the amount by which the carrying value exceeds the reporting unit's fair value with the loss not exceeding the total amount of goodwill allocated to that reporting unit. The updated guidance is effective for the Company beginning January 1, 2020, with early adoption permitted, and will be applied on a prospective basis. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. Statement of Cash Flows - In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments - A consensus of the FASB Emerging Issues Task Force.” The update was issued with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230 and other topics. The update is effective for the Company for fiscal years beginning with the Company's 2019 fiscal year, including interim periods within those fiscal years. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. Financial Instruments - Credit Losses - In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The amendments in this update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The update is effective for the Company for fiscal years beginning with the Company's 2021 fiscal year, including interim periods within those fiscal years. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. Compensation - Stock Compensation —In March 2016, the FASB issued ASU No. 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Accounting.” The update simplifies the income tax accounting and cash flow presentation related to share-based compensation by requiring the recognition of all excess tax benefits and deficiencies directly on the income statement and classification as cash flows from operating activities on the statement of cash flows. This update also makes several changes to the accounting for forfeitures and employee tax withholding on share-based compensation. The update is effective for the Company for annual and interim periods beginning with the Company's 2018 fiscal year, and early adoption is permitted. The Company does not expect this guidance to have a material impact on its consolidated financial statements. Leases — In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which requires lessees to recognize most lease liabilities on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. The update states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The update is effective for the Company for annual and interim periods beginning with the Company's 2020 fiscal year, and early adoption is permitted. Although the Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures, the Company expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon adoption. Balance Sheet Classifications of Deferred Taxes — In November 2015, the FASB issued an amendment to its accounting guidance related to balance sheet classification of deferred taxes in ASU 2015-17, “Income Taxes (Topic 740).” The amendment requires that deferred tax assets and liabilities be classified as noncurrent in the statement of financial position. The Company elected to early adopt this standard in the fourth quarter of fiscal 2016 on a prospective basis. Other than the reclassification of deferred tax amounts in the Consolidated Statements of Financial Position as of January 29, 2016, the amendment had no impact on the Company’s Consolidated Statements of Financial Position. Revenue from Contracts with Customers — In May 2014, the FASB issued amended guidance on the recognition of revenue from contracts with customers. The objective of the new standard is to establish a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most of the existing revenue recognition guidance, including industry-specific guidance. The new standard requires entities to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB approved a one-year deferral of the effective date of this standard. Public entities are required to adopt the new standard for fiscal years, and interim periods within those years, beginning after December 15, 2017. The new revenue standard may be applied retrospectively to each prior period presented (full retrospective method) or retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application in retained earnings (modified retrospective method). The Company currently anticipates adopting this standard retrospectively to each period presented for the fiscal year beginning February 3, 2018. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. |
Net Loss Per Share
Net Loss Per Share | 12 Months Ended |
Feb. 03, 2017 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | NET LOSS PER SHARE Net loss per share is calculated by dividing net loss for the periods presented by the respective weighted-average number of common shares outstanding, and excludes any dilutive effects of share-based awards as they would be anti-dilutive. Diluted net loss per common share is computed by giving effect to all potentially dilutive common shares, including common stock issuable upon the exercise of stock options and unvested restricted common stock and restricted stock units. The Company applies the two-class method to calculate earnings per share. Because both classes share the same rights in dividends and earnings, earnings per share (basic and diluted) are the same for both classes. Since losses were incurred in all periods presented, all potential common shares were determined to be anti-dilutive. The following table sets forth the computation of net loss per common share (in thousands, except per share amounts): Fiscal Years Ended February 3, 2017 January 29, 2016 January 30, 2015 Numerator: Net loss $ (38,213 ) $ (72,381 ) $ (38,490 ) Denominator: Weighted-average number of shares outstanding: Basic and Diluted 77,635 70,000 70,000 Loss per common share: Basic and Diluted $ (0.49 ) $ (1.03 ) $ (0.55 ) Weighted-average anti-dilutive stock options, non-vested restricted stock and restricted stock units 3,806 — — |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Feb. 03, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | GOODWILL AND INTANGIBLE ASSETS Goodwill relates to the acquisition of Dell by Dell Technologies and represents the excess of the purchase price attributable to SecureWorks over the fair value of the assets acquired and liabilities assumed. There were no additions, adjustments or impairments to goodwill during the periods presented. Accordingly, goodwill totaled $416.5 million as of February 3, 2017 and January 29, 2016 . Goodwill and indefinite-lived intangible assets are tested for impairment on an annual basis during the third fiscal quarter, or sooner if an indicator of impairment occurs. The Company completed its annual impairment test by performing a qualitative assessment of goodwill at its sole reporting unit level. In performing this qualitative assessment, the Company evaluated events and circumstances since the date of the last quantitative impairment test, including the results of that test, macroeconomic conditions, industry and market conditions, key financial metrics and overall financial performance of the Company. After assessing the totality of the events and circumstances, the Company determined that it was not more likely than not that the fair value of the SecureWorks reporting unit was less than its carrying amount and, therefore, the first and second steps of the quantitative goodwill impairment test were deemed unnecessary. Further, no triggering events have subsequently transpired that would indicate a potential impairment as of February 3, 2017 . Intangible Assets The Company's intangible assets at February 3, 2017 and January 29, 2016 were as follows: February 3, 2017 January 29, 2016 Gross Accumulated Amortization Net Gross Accumulated Amortization Net (in thousands) Customer relationships $ 189,518 $ (48,963 ) $ 140,555 $ 189,518 $ (34,869 ) $ 154,649 Technology 135,584 (44,336 ) 91,248 135,584 (30,694 ) 104,890 Finite-lived intangible assets 325,102 (93,299 ) 231,803 325,102 (65,563 ) 259,539 Trade name 30,118 — 30,118 30,118 — 30,118 Total intangible assets $ 355,220 $ (93,299 ) $ 261,921 $ 355,220 $ (65,563 ) $ 289,657 Amortization expense related to finite-lived intangible assets was approximately $27.7 million , $28.3 million and $29.8 million for the fiscal years ended February 3, 2017 , January 29, 2016 and January 30, 2015 , respectively. Amortization expense is included within cost of revenue and general and administrative in the Consolidated Statement of Operations. There were no impairment charges related to intangible assets during the fiscal years ended February 3, 2017 , January 29, 2016 and January 30, 2015 . Estimated future pre-tax amortization expense of finite-lived intangible assets as of January 29, 2016 over the next five years and thereafter is as follows: Fiscal Years (in thousands) 2018 $ 27,736 2019 27,736 2020 27,736 2021 27,736 2022 27,736 Thereafter 93,123 Total $ 231,803 |
Debt
Debt | 12 Months Ended |
Feb. 03, 2017 | |
Debt Disclosure [Abstract] | |
Debt | DEBT Convertible Debt On June 30, 2015, the Company entered into an agreement with investors to sell up to $25.0 million in aggregate principal amount of its convertible notes. These investors included members of the Company’s board of directors who were director nominees prior to the date of the IPO. The initial sale of convertible notes was completed on August 3, 2015 in the aggregate principal amount of $22.0 million . On September 14, 2015, the Company sold an additional convertible note in the principal amount of $0.5 million , resulting in an aggregate principal amount of convertible notes outstanding of $22.5 million . As of January 29, 2016, the fair value of the convertible notes was $ 28.0 million and the Company recorded a $5.5 million change in fair value during the fiscal year ended January 29, 2016. The convertible notes were valued using Level 3 inputs. This change in fair value was included in interest and other, net in the Statements of Operations. These notes remained outstanding until the completion of the IPO, on which date, according to their terms, the convertible notes automatically converted into 2,008,924 shares of the Class A common stock and with a total settlement of $28.1 million and a $0.1 million change in fair value being recorded in fiscal 2017 for the period prior to settlement. The converted shares equaled the $22.5 million face value of the convertible notes divided by the conversion price of $11.20 per share, which was equal to 80% of the IPO price of $14.00 per share. Revolving Credit Facility On November 2, 2015, SecureWorks, Inc., a wholly-owned subsidiary of SecureWorks Corp., entered into a revolving credit agreement with a wholly-owned subsidiary of Dell Inc. under which the Company obtained a $30 million senior unsecured revolving credit facility. This facility was initially available for a one-year term ending on April 21, 2017. On March 28, 2017, subsequent to the end of fiscal 2017, the facility was extended on the same terms for an additional one-year term ending on April 21, 2018. Under the facility, up to $30 million principal amount of borrowings may be outstanding at any time. The maximum amount of borrowings may be increased by up to an additional $30 million by mutual agreement of the lender and borrower. The proceeds from loans made under the facility may be used for general corporate purposes. The facility is not guaranteed by SecureWorks Corp. or its subsidiaries. There was no outstanding balance under the credit facility as of February 3, 2017 . Each loan made under the revolving credit facility will accrue interest at an annual rate equal to the applicable London interbank offered rate plus 1.60% . Amounts under the facility may be borrowed, repaid and reborrowed from time to time during the term of the facility. The borrower will be required to repay in full all of the loans outstanding, including all accrued interest, and the facility will terminate, upon a change of control of SecureWorks Corp. or following a transaction in which SecureWorks, Inc. ceases to be a direct or indirect wholly-owned subsidiary of SecureWorks Corp. The credit agreement contains customary representations, warranties and events of default. The unused portion of the facility is subject to a commitment fee of 0.35% , which is due upon expiration of the facility. As of February 3, 2017 , the Company had accrued $0.08 million for commitment fees due under the facility. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Feb. 03, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Purchase Obligations and Lease Commitments —The Company had various purchase obligations at February 3, 2017 over a period of approximately four years with vendors or contractors, subject to the Company’s operational needs. The Company also leases land, office buildings and equipment under various operating lease agreements. As of February 3, 2017 , the purchase obligations and future minimum payments under the Company's operating leases are as follows: Payments Due For Operating Purchase Credit Facilities Fiscal Years Ending Leases Obligations and Other (1) Total 2018 $ 4,536 $ 9,346 $ 1,923 $ 15,805 2019 4,268 1,371 1,123 6,762 2020 3,759 1,080 — 4,839 2021 1,241 739 — 1,980 2022 938 — — 938 2023 and beyond 246 — — 246 Total $ 14,988 $ 12,536 $ 3,046 $ 30,570 (1) Reflects purchase obligations of annual maintenance services for hardware systems for internal use from a related party. See also "Note 10—Related Party Transactions." Rent expense under all leases totaled $3.9 million , $3.0 million , and $2.7 million during the fiscal years ended February 3, 2017 , January 29, 2016 and January 30, 2015 , respectively. Legal Contingencies — From time to time, the Company is involved in claims and legal proceedings that arise in the ordinary course of business. The Company accrues a liability when it believes that it is both probable that a liability has been incurred and that it can reasonably estimate the amount of the loss. The Company reviews the status of legal cases at least quarterly and adjusts its liabilities as necessary to reflect ongoing negotiations, settlements, rulings, advice of legal counsel and other relevant information. Whether the outcome of any claim, suit, assessment, investigation or legal proceeding, individually or collectively, could have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows will depend on a number of factors, including the nature, timing and amount of any associated expenses, amounts paid in settlement, damages or other remedies or consequences. To the extent new information is obtained and the Company’s views on the probable outcomes of claims, suits, assessments, investigations or legal proceedings change, changes in accrued liabilities would be recorded in the period in which such determination is made. As of February 3, 2017 , the Company does not believe that there were any such matters that, individually or in the aggregate, could have a material adverse effect on its business, financial condition, results of operations or cash flows. Indemnifications — In the ordinary course of business, the Company enters into contractual arrangements under which it agrees to indemnify its clients from certain losses incurred by the client as to third-party claims relating to the services performed on behalf of the Company or for certain losses incurred by the client as to third-party claims arising from certain events as defined within the particular contract. Such indemnification obligations may not be subject to maximum loss clauses. Historically, payments related to these indemnifications have been immaterial. Concentrations — The Company sells solutions to clients of all sizes primarily through its direct sales organization, supplemented by sales through channel partners. The Company had a single client that represented less than 10% of its revenues for each of the fiscal years ended February 3, 2017 and January 29, 2016 and approximately 12% of its revenue for the fiscal year ended January 30, 2015 . |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Feb. 03, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLAN In connection with the IPO, the Company's board of directors adopted the SecureWorks Corp. 2016 Long-Term Incentive Plan (the "2016 Plan"). The 2016 Plan became effective on April 18, 2016 and will expire on the tenth anniversary of the effective date unless the 2016 Plan is terminated earlier by the board of directors or in connection with a change in control of SecureWorks Corp. The Company has reserved 8,500,000 shares of Class A common stock for issuance pursuant to awards under the 2016 Plan. The 2016 Plan provides for the grant of options, stock appreciation rights, restricted stock, restricted stock units, deferred stock units, unrestricted stock, dividend equivalent rights, other equity-based awards and cash bonus awards. Awards may be granted under the 2016 Plan to individuals who are employees, officers, or non-employee directors of the Company or any of its affiliates, consultants and advisors who perform services for the Company or any of its affiliates, and any other individual whose participation in the 2016 Plan is determined to be in the best interests of the Company by the compensation committee of the board of directors. Stock Options Under the 2016 Plan, the exercise price of each option will be determined by the compensation committee, except that the exercise price may not be less than 100% (or, for incentive stock options to any 10% stockholder, 110% ) of the fair market value of a share of Class A common stock on the date on which the option is granted. The term of an option may not exceed ten years (or, for incentive stock options to any 10% stockholder, five years ) from the date of grant. The compensation committee will determine the time or times at which each option may be exercised and the period of time, if any, after retirement, death, disability or termination of employment during which options may be exercised. Options may be made exercisable in installments, and the exercisability of options may be accelerated by the compensation committee. During the fiscal year ended February 3, 2017 , in connection with the IPO, 2,669,788 stock options were granted to employees and 240,715 stock options were granted to directors, in all cases at an exercise price of $14.00 per share. The stock options will vest over an average service period of four years . In addition, 49,916 stock options were granted to a director upon his appointment to the board of directors at an exercise price of $13.99 per share. The stock options subject to this award will vest over a period of three years in equal annual installments. The Company recognized $2.9 million in compensation expense for the fiscal year ended February 3, 2017 . The tax benefit related to stock-based compensation expense was $1.2 million for the fiscal year ended February 3, 2017 . The fair value of stock options granted during the fiscal year ended February 3, 2017 was estimated as of the date of the grant using the Black-Scholes option pricing model. This model requires the input of subjective assumptions that will usually have a significant impact on the fair value estimate. The expected term was estimated using the SEC simplified method. The risk-free interest rate is the continuously compounded, term-matching, zero-coupon rate from the valuation date. The volatility is the leverage-adjusted, term-matching, historical volatility of peer firms. The dividend yield assumption is consistent with management expectations of dividend distributions based upon the Company’s business plan at the date of grant. The weighted assumptions utilized for valuation of options under this model as well as the weighted-average grant date fair value of stock options granted during the fiscal year ended February 3, 2017 are summarized below. Fiscal Year Ended February 3, 2017 Expected life 6.3 years Risk-free interest rate 1.68% Volatility 44.74% Dividend yield —% Expected forfeiture rate 6.12% Weighted-average grant-date fair value $6.15 The following table summarizes stock option activity and options outstanding and exercisable for the fiscal year ended, and as of, February 3, 2017 : Number of Options Weighted- Weighted- Weighted-Average Grant date Fair Value Per Share Aggregate Intrinsic Value (in thousands) Balance, January 29, 2016 — $ — — $ — — Granted 2,960,419 $ 14.00 8.77 $ 6.15 $ — Exercised — $ — — — Canceled, expired or forfeited (382,252 ) $ 14.00 — $ 6.34 — Balance, February 3, 2017 2,578,167 $ 14.00 9.22 $ 6.12 $ — Options expected to vest, February 3, 2017 2,414,550 $ 14.00 9.22 $ 6.11 $ — Options exercisable, February 3, 2017 — $ — — $ — $ — At February 3, 2017 , unrecognized stock-based compensation expense related to stock options was $ 11.8 million , net of estimated forfeitures, which is expected to be recognized over the weighted-average remaining requisite period of 3.51 years . In connection with the acquisition of Dell by Dell Technologies in 2013, the Company’s compensation programs included grants under the Denali Holding Inc. 2013 Stock Incentive Plan (the "2013 Plan"). Under the 2013 Plan, time-based and performance-based options to purchase shares of the Series C common stock of Dell Technologies were awarded to two of the Company's executive officers. Upon the closing of the Company's IPO, 165,820 unvested time-based awards were forfeited. During the fiscal year ended February 3, 2017 , 78,544 stock options were exercised at a weighted average exercise price of $13.75 per share. The total intrinsic value of the options exercised was $1.2 million . As of February 3, 2017 , 432,001 awards remained outstanding. The Company recognized compensation expense related to these awards of $0.5 million , $0.8 million , and $0.8 million for the fiscal years ended February 3, 2017 , January 29, 2016 , and January 30, 2015 , respectively. Restricted Stock and Restricted Stock Units Under the 2016 Plan, a restricted stock award is an award of shares of Class A common stock that may be subject to restrictions on transferability and other restrictions as the compensation committee determines in its sole discretion on the date of grant. The restrictions, if any, may lapse over a specified period of time or through the satisfaction of conditions, in installments or otherwise as the compensation committee may determine. Unless otherwise provided in an award agreement, a grantee who receives restricted stock will have all of the rights of a stockholder as to those shares, including, without limitation, the right to vote and the right to receive dividends or distributions on the shares of Class A common stock, except that the compensation committee may require any dividends to be withheld and accumulated contingent on vesting of the underlying shares or reinvested in shares of restricted stock. Under the 2016 Plan, a restricted stock unit represents the grantee’s right to receive a compensation amount, based on the value of the shares of Class A common stock, if vesting criteria or other terms and conditions established by the compensation committee are met. If the vesting criteria or other terms and conditions are met, the Company may settle, subject to the terms and conditions of the applicable award agreement, restricted stock units in cash, shares of Class A common stock or a combination of the two. All award agreements currently outstanding require settlement in shares of Class A common stock. In connection with the IPO, 662,225 shares of restricted stock and 1,378,436 restricted stock units were granted to employees. In addition, 66,965 restricted stock units were granted to directors. The fair value of the restricted stock and restricted stock units was $14.00 per share. During the fiscal year ended February 3, 2017 , 344,034 additional restricted stock units were issued to employees at a weighted-average fair values per share of $10.90 . In addition, during the third quarter of the fiscal year ended February 3, 2017 , 8,934 restricted stock units were granted to a director upon his appointment to the board of directors at a fair value of $13.99 per share. The Company recognized compensation expense related to all outstanding restricted stock awards of $5.4 million for the fiscal year ended February 3, 2017 . At February 3, 2017 , unrecognized stock-based compensation expense related to restricted stock awards and restricted stock units was $22.0 million , which is expected to be recognized over the weighted-average remaining requisite period of 3.49 years . The following table summarizes activity for restricted stock and restricted stock units for the fiscal year ended, and as of, February 3, 2017 . Number of Shares Weighted- Average Grant Date Fair Value Per Share Weighted- Aggregate Intrinsic Value (in thousands) Balance, January 29, 2016 — $ — — $ — Granted 2,460,594 $ 13.28 1.71 $ 26,058 Vested (2,143 ) $ 14.00 — — Forfeited (215,965 ) $ 14.00 — — Converted — — — — Balance, February 3, 2017 2,242,486 $ 13.21 1.88 $ 23,748 Restricted stock and restricted stock units expected to vest, February 3, 2017 2,050,166 $ 13.22 2.05 $ 21,711 Stock-based Compensation Expense The following table summarizes the classification of stock-based compensation expense related to stock options, restricted stock and restricted stock units for the fiscal years ended February 3, 2017 , January 29, 2016 and January 30, 2015 . Stock-based compensation expense for the periods prior to fiscal 2017 related solely to grants under the Denali Holding Inc. 2013 Stock Incentive Plan awarded to two of the Company's executive officers. Fiscal Years Ended February 3, January 29, January 30, (in thousands) Cost of revenue $ 462 $ — $ — Research and development 2,033 277 259 Sales and marketing 1,068 — — General and administrative 5,320 564 526 Total stock-based compensation expense $ 8,883 $ 841 $ 785 Employee Benefit Plan Substantially all employees are eligible to participate in a defined contribution plan that complies with Section 401(k) of the Internal Revenue Code (“401(k) Plan”). The Company matches 100% of each participant’s voluntary contributions, subject to a maximum contribution of 5% of the participant’s compensation, and participants vest immediately in all contributions to the 401(k) Plan. For the fiscal years ended February 3, 2017 , January 29, 2016 and January 30, 2015 , total expense under this plan was $9.4 million , $6.7 million , and $5.3 million , respectively. |
Income and Other Taxes
Income and Other Taxes | 12 Months Ended |
Feb. 03, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure | INCOME AND OTHER TAXES The Company’s effective income tax rate for the fiscal years ended February 3, 2017 , January 29, 2016 , and January 30, 2015 was as follows: Fiscal Years Ended February 3, 2017 January 29, 2016 January 30, 2015 Loss before income taxes $ (63,477 ) $ (112,577 ) $ (61,235 ) Income tax benefit $ (25,264 ) $ (40,196 ) $ (22,745 ) Effective tax rate 39.8 % 35.7 % 37.1 % The change in the Company's effective income tax rate for the fiscal year ended February 3, 2017 over the effective income tax rate for the fiscal year ended January 29, 2016 was primarily attributable to the recognition of additional tax benefits relating to research and development tax credits during fiscal 2017. The change in the Company's effective income tax rate for the fiscal year ended January 29, 2016 over the effective income tax rate for the fiscal year ended January 30, 2015 was primarily attributable to a change in the mix of geographic losses. During the periods presented in the accompanying Consolidated Financial Statements, SecureWorks did not file separate federal tax returns, as the Company generally was included in the tax grouping of other Dell entities within the respective entity’s tax jurisdiction. The income tax benefit has been calculated using the separate return method modified to apply the benefits-for-loss approach. Under the benefits-for-loss approach, net operating losses or other tax attributes are characterized as realized by SecureWorks when those attributes are utilized by other members of the Dell consolidated group. A reconciliation of the Company's income tax provision to the statutory U.S. federal tax rate is as follows: Fiscal Year Ended February 3, 2017 January 29, 2016 January 30, 2015 U.S. federal statutory rate 35.0 % 35.0 % 35.0 % Foreign income taxed at different rates (0.3 ) (0.9 ) (0.7 ) State income taxes, net of federal tax benefit 3.2 1.9 2.8 Research and development credits 3.1 0.5 — Nondeductible/nontaxable items (1.2 ) (0.8 ) — Total 39.8 % 35.7 % 37.1 % The benefit for income taxes consists of the following: Fiscal Years Ended February 3, 2017 January 29, 2016 January 30, 2015 (in thousands) Current: Federal $ (22,470 ) $ (12,519 ) $ (7,552 ) State/Local 657 (1,517 ) (585 ) Foreign 1,379 (1,366 ) (383 ) Current (20,434 ) (15,402 ) (8,520 ) Deferred: Federal (3,620 ) (24,472 ) (12,970 ) State/Local (471 ) 330 (1,172 ) Foreign (739 ) (652 ) (83 ) Deferred (4,830 ) (24,794 ) (14,225 ) Income tax benefit $ (25,264 ) $ (40,196 ) $ (22,745 ) Loss before provision for income taxes consists of the following: Fiscal Years Ended February 3, 2017 January 29, 2016 January 30, 2015 (in thousands) Domestic $ (64,542 ) $ (103,061 ) $ (58,641 ) Foreign 1,065 (9,516 ) (2,594 ) Loss before income taxes $ (63,477 ) $ (112,577 ) $ (61,235 ) The components of the Company's net deferred tax balances are as follows: February 3, 2017 January 29, 2016 (in thousands) Deferred tax assets: Deferred revenue $ 6,232 $ 5,231 Provision for doubtful accounts 2,377 874 Credit carryforwards — 480 Loss carryforwards 2,806 18,509 Stock-based and deferred compensation 9,568 6,443 Deferred tax assets 20,983 31,537 Valuation allowance (2,806 ) (2,438 ) Deferred tax assets, net of valuation allowance 18,177 29,099 Deferred tax liabilities: Property and equipment (1,367 ) (192 ) Purchased intangible assets (97,836 ) (107,901 ) Operating and compensation related accruals (3,933 ) (7,855 ) Other (29 ) (732 ) Deferred tax liabilities (103,165 ) (116,680 ) Net deferred tax liabilities $ (84,988 ) $ (87,581 ) Net deferred tax balances are included in other non-current assets and other non-current liabilities in the Consolidated Statements of Financial Position. As of February 3, 2017 and January 29, 2016 , SecureWorks had $2.8 million and $2.4 million of deferred tax assets, respectively, related to net operating loss carryforwards for state tax returns that are not included with those of other Dell entities. These net operating loss carryforwards began expiring in the fiscal year ended February 3, 2017 . Due to the uncertainty surrounding the realization of these net operating loss carryforwards, the Company has provided valuation allowances for the full amount as of February 3, 2017 and January 29, 2016 . Because the Company is included in the tax filings of certain other Dell entities, management has determined that it will be able to realize the remainder of its deferred tax assets. If the Company’s tax provision had been prepared using the separate return method, the unaudited pro forma pre-tax loss, tax benefit and net loss for the fiscal year ended February 3, 2017 would have been $63.5 million , $12.1 million and $51.4 million , respectively, as a result of the recognition of a valuation allowance that would be recorded on certain deferred tax assets. The cumulative undistributed earnings in the Company’s non-U.S. jurisdictions are currently negative. The Company, therefore, has no unrecognized deferred tax liability on these earnings. The Company had $0.6 million of unrecognized tax benefits as of February 3, 2017 and no unrecognized tax benefits as of January 29, 2016 . The Company is no longer subject to tax examinations for years prior to fiscal 2012. |
Selected Financial Information
Selected Financial Information (Notes) | 12 Months Ended |
Feb. 03, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Selected Financial Information | SELECTED FINANCIAL INFORMATION The following table provides information on amounts included in accounts receivable, net, other current assets, property and equipment, net, accrued and other current liabilities, and other non-current liabilities as of February 3, 2017 and January 29, 2016 . Consolidated February 3, 2017 January 29, 2016 (in thousands) Accounts receivable, net: Gross accounts receivable $ 119,678 $ 120,841 Allowance for doubtful accounts (6,132 ) (4,484 ) Total $ 113,546 $ 116,357 Other current assets: Income tax receivable 25,091 — Prepaid maintenance and support agreements 16,107 17,736 Prepaid other 10,749 8,475 Total $ 51,947 $ 26,211 Property and equipment, net Computer equipment $ 47,407 $ 29,001 Leasehold improvements 16,986 15,470 Other equipment 1,358 966 Total property and equipment 65,751 45,437 Accumulated depreciation $ (34,598 ) $ (22,671 ) Total $ 31,153 $ 22,766 Other noncurrent assets Prepaid maintenance agreements 2,304 1,700 Deferred tax asset 1,503 709 Deferred IPO costs — 4,329 Other 1,897 2,598 Total $ 5,704 $ 9,336 Accrued and other current liabilities Compensation $ 36,803 $ 29,439 Intercompany payable, net 9,052 21,691 Other 13,849 9,277 Total $ 59,704 $ 60,407 Other non-current liabilities Deferred tax liabilities $ 86,491 $ 88,290 Intercompany payable, net 1,100 — Other 1,801 2,694 Total $ 89,392 $ 90,984 The allocation between domestic and foreign net revenue is based on the location of the Company’s clients. Net revenue and long-lived assets from any single foreign country did not constitute more than 10% of the Company’s net revenue or long-lived assets, respectively, during any of the periods presented. The following tables present net revenue and property, plant and equipment allocated between the United States and foreign countries: Fiscal Year Ended February 3, 2017 January 29, 2016 January 30, 2015 Net revenue United States $ 374,254 $ 298,984 $ 230,309 Foreign Countries 55,248 40,538 31,821 Total $ 429,502 $ 339,522 $ 262,130 February 3, 2017 January 29, 2016 Property and equipment, net United States $ 26,916 $ 20,453 Foreign Countries 4,237 2,313 Total $ 31,153 $ 22,766 |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Feb. 03, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | RELATED PARTY TRANSACTIONS Allocated Expenses For the periods presented, Dell has provided various corporate services to SecureWorks in the ordinary course of business, including finance, tax, human resources, legal, insurance, IT, procurement and facilities-related services. Dell also has provided SecureWorks with the services of a number of its executives and employees. For the first two quarters of fiscal 2016, the costs of such services were allocated to the Company based on the allocation method most relevant to the service provided, primarily based on relative percentage of total net sales, relative percentage of headcount or specific identification. Beginning in the third quarter of fiscal 2016, the costs of services provided to SecureWorks by Dell were governed by a shared services agreement between SecureWorks and Dell Inc. or its wholly-owned subsidiaries. The total amount of the charges under the shared services agreement with Dell was $4.4 million for the fiscal year ended February 3, 2017 . The total amount of the allocations from Dell and charges under the shared services agreement was $5.5 million and $3.0 million , respectively, in the fiscal year ended January 29, 2016 . The total amount of the allocations from Dell was $7.2 million in the fiscal year ended January 30, 2105. The amount for the fiscal year ended January 29, 2016 included $2.2 million of fees for professional services directly related to a prior legal proceeding that was settled during the fiscal year ended January 29, 2016 . These cost allocations are reflected primarily within general and administrative expenses in the Consolidated Statements of Operations. Management believes that the basis on which the expenses have been allocated to be a reasonable reflection of the utilization of services provided to or the benefit received by the Company during the periods presented. The Company’s historical financial statements do not purport to reflect what the Company's results of operations, financial position, equity or cash flows would have been if the Company had operated as a stand-alone public company during the periods presented. Related Party Arrangements For the periods presented, related party transactions and activities involving Dell Inc. and its wholly-owned subsidiaries were not always consummated on terms equivalent to those that would prevail in an arm’s-length transaction where conditions of competitive, free-market dealing may exist. The Company purchases certain enterprise hardware systems from Dell Inc. and its wholly-owned subsidiaries in order to provide security solutions to the Company’s clients. For fiscal 2015 and the first two quarters of fiscal 2016, the expenses associated with these transactions reflect Dell’s costs and are included in cost of revenue in the Consolidated Statements of Operations. Beginning in the third quarter of fiscal 2016, expenses associated with these transactions are intended to approximate arm’s-length pricing pursuant to the Company’s amended and restated master commercial customer agreement with a subsidiary of Dell Inc. that went into effect on August 1, 2015. Purchases of systems from Dell totaled $3.0 million , $11.6 million and $7.8 million for the fiscal years ended February 3, 2017 , January 29, 2016 and January 30, 2015 , respectively. The Company also purchases computer equipment for internal use from Dell that was capitalized within property and equipment in the Consolidated Statements of Financial Position. For the first two quarters of fiscal 2016, these purchases were made at Dell’s cost. Beginning in the third quarter of fiscal 2016, these purchases were made at pricing that is intended to approximate arm’s-length pricing. Purchases of computer equipment from Dell totaled $3.6 million , $3.7 million , and $3.1 million for the fiscal years ended February 3, 2017 , January 29, 2016 , and January 30, 2015 , respectively. On September 7, 2016, EMC Corporation (“EMC”), a company that provides enterprise software and storage, became a wholly-owned subsidiary of Dell Technologies. EMC maintains a majority ownership interest in a subsidiary, VMware, Inc. (“VMware”), a company that provides cloud and virtualization software and services. The Company's purchases of annual maintenance services and hardware systems for internal use from EMC and VMware totaled $4.4 million between September 7, 2016 and February 3, 2017 . Approximately $3.0 million of these purchases from VMware was financed through Dell Financial Services and are included in intercompany liabilities as of February 3, 2017 . The Company recognized revenue related to solutions provided to principal stockholders of Dell Technologies consisting of Michael S. Dell, Chairman and Chief Executive Officer of Dell Technologies and Dell Inc., the Susan Lieberman Dell Separate Property Trust (a separate property trust for the benefit of Mr. Dell’s wife) and MSD Capital, L.P. (a firm founded for the purposes of managing investments of Mr. Dell and his family). The revenues recognized by the Company from solutions provided to Mr. Dell, the Susan Lieberman Dell Separate Property Trust and MSD Capital totaled $0.1 million , $0.3 million , and $0.3 million for the fiscal years ended February 3, 2017 , January 29, 2016 and January 30, 2015 , respectively. The Company provides solutions to certain clients whose legal contractual relationship has historically been with Dell rather than SecureWorks, although the Company is the primary obligor and carries credit and inventory risk in these arrangements. Effective on August 1, 2015, upon the creation of new subsidiaries to segregate some of the Company’s operations from Dell’s operations, as described in “Note 1—Description of the Business and Basis of Presentation,” many of such client contracts were transferred from Dell to the Company, forming a direct legal contractual relationship between the Company and the end client. For clients whose contracts have not yet been transferred, the Company recognized revenues of approximately $39.0 million for the fiscal year ended February 3, 2017 and $16.7 million for the period from August 1, 2015 to January 29, 2016. As the Company’s client and on behalf of certain of its own clients, Dell also purchases solutions from the Company. Beginning in the third quarter of fiscal 2016, in connection with the effective date of the Company’s commercial agreements with Dell, the Company began charging Dell for these services at pricing that is intended to approximate arm’s-length pricing, in lieu of the prior cost recovery arrangement. Such revenues totaled approximately $22.0 million and $7.5 million for the fiscal years ended February 3, 2017 and January 29, 2016 , respectively. As a result of the foregoing related party arrangements beginning in the third quarter of fiscal 2016, the Company has recorded the following related party balances in the Consolidated Statement of Financial Position as of February 3, 2017 and January 29, 2016 . During the third quarter of fiscal 2017, the Company began settling in cash its related party balances with Dell, which resulted in a net intercompany payable. February 3, 2017 January 29, 2016 (in thousands) Intercompany receivable $ 1,680 $ 19,496 Intercompany payable (11,832 ) (41,187 ) Net intercompany payable (in accrued and other) $ (10,152 ) $ (21,691 ) Accounts receivable from clients under reseller agreements with Dell (in accounts receivable, net) $ 16,658 $ 15,552 Net operating loss tax sharing receivable under agreement with Dell (in other current assets at February 3, 2017 and other non-current liabilities at January 29, 2016) $ 25,091 $ 18,509 Cash Management Dell utilizes a centralized approach to cash management and financing of its operations. For the period presented prior to August 1, 2015, Dell funded the Company’s operating and investing activities as needed and transferred the Company’s excess cash at its discretion. This arrangement is not reflective of the manner in which the Company would have been able to finance the Company’s operations had the Company been a stand-alone business separate from Dell prior to August 1, 2015. Cash transfers to and from Dell’s cash management accounts prior to August 1, 2015 are reflected within additional paid in capital in the Consolidated Statements of Financial Position and the Consolidated Statements of Cash Flows as a financing activity. |
Unaudited Quarterly Results of
Unaudited Quarterly Results of Operations (Notes) | 12 Months Ended |
Feb. 03, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Unaudited Quarterly Results of Operations | UNAUDITED QUARTERLY RESULTS OF OPERATIONS The following table presents selected unaudited Statements of Operations for each quarter of fiscal 2017 and fiscal 2016: Fiscal Year 2017 First Second Third Fourth Quarter Quarter Quarter Quarter Net revenue $ 99,793 $ 103,653 $ 107,108 $ 118,948 Gross margin $ 49,944 $ 50,746 $ 53,471 $ 62,742 Net loss $ (11,627 ) $ (12,051 ) $ (7,718 ) $ (6,817 ) Net loss per common share (basic and diluted) (1) $ (0.17 ) $ (0.15 ) $ (0.10 ) $ (0.09 ) Weighted-average common shares outstanding (basic and diluted 70,330 80,009 80,009 80,009 Fiscal Year 2016 First Second Third Fourth Quarter Quarter Quarter Quarter Net revenue $ 77,399 $ 79,855 $ 88,187 $ 94,081 Gross margin $ 33,403 $ 35,138 $ 42,722 $ 44,450 Net loss $ (17,830 ) $ (21,124 ) $ (18,528 ) $ (14,899 ) Net loss per common share (basic and diluted) (1) $ (0.25 ) $ (0.30 ) $ (0.26 ) $ (0.21 ) Weighted-average common shares outstanding (basic and diluted) 70,000 70,000 70,000 70,000 (1) Basic and diluted net loss per common share are computed independently for each of the quarters presented. Therefore, the sum of the quarterly basic and diluted net loss per common share amounts may not equal the annual basic and diluted net loss per common share amounts. Reclassifications As discussed in “Note 2—Significant Accounting Policies”, the Company made certain operating expense reclassifications to better reflect management’s view of these costs and to improve comparability of its financial statements with those of other companies within the same industry. The following presents the reclassifications to the previously reported Consolidated Statements of Operations for the quarterly periods in the fiscal years ended February 3, 2017 and January 29, 2016 as presented in the Company's quarterly reports on Form 10-Q filed for quarterly periods in fiscal 2017, except for information for the three months ended January 29, 2016, as noted below. See Note 2 for discussion of the nature of such reclassifications. Research and Development Sale and Marketing General and Administrative Total Operating Expense Fiscal Year 2017 Three months ended April 29, 2016 As stated $ 13,596 $ 27,496 $ 27,852 $ 68,944 Reclassification 4,001 2,766 (6,767 ) — As reclassified $ 17,597 $ 30,262 $ 21,085 $ 68,944 July 29, 2016 As stated $ 12,848 $ 28,639 $ 29,306 $ 70,793 Reclassification 4,525 3,181 (7,706 ) — As reclassified $ 17,373 $ 31,820 $ 21,600 $ 70,793 October 28, 2016 As stated $ 12,181 $ 26,424 $ 29,709 $ 68,314 Reclassification 4,782 3,301 (8,083 ) — As reclassified $ 16,963 $ 29,725 $ 21,626 $ 68,314 Research and Sales and General and Total Operating Fiscal Year 2016 Development Marketing Administrative Expense Three months ended May 1, 2015 As stated $ 11,830 $ 22,119 $ 25,784 $ 59,733 Reclassification 5,100 2,057 (7,157 ) — As reclassified $ 16,930 $ 24,176 $ 18,627 $ 59,733 July 31, 2015 As stated $ 12,643 $ 26,696 $ 28,148 $ 67,487 Reclassification 4,941 2,514 (7,455 ) — As reclassified $ 17,584 $ 29,210 $ 20,693 $ 67,487 October 30, 2015 As stated $ 12,230 $ 27,109 $ 28,228 $ 67,567 Reclassification 4,757 2,526 (7,283 ) — As reclassified $ 16,987 $ 29,635 $ 20,945 $ 67,567 January 29, 2016 As stated (1) $ 13,045 $ — $ 53,889 $ 66,934 Reclassification 5,052 28,957 (34,009 ) — As reclassified $ 18,097 $ 28,957 $ 19,880 $ 66,934 (1) As disclosed in the Company's registration statement on Form S-1/A filed April 11, 2016 in connection with the IPO. Prior to the filing of the Company's Quarterly Report on Form 10-Q for the period ended April 29, 2016, the Company presented sales and marketing expense on a combined basis with general and administrative expense. |
Subsequent Event (Notes)
Subsequent Event (Notes) | 12 Months Ended |
Feb. 03, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS As indicated in “Note 5—Debt,” on March 28, 2017, the Company and a wholly-owned subsidiary of Dell Inc. entered into an amendment to the revolving credit agreement providing for a one-year extension, to April 21, 2018, of the Company’s $30 million senior unsecured revolving credit facility under the same terms as the original facility. There were no other known events occurring after the balance sheet date and up to the date of issuance of these financial statements that would materially affect the information presented herein. The Company evaluated subsequent events through March 29, 2017 , the date of the issuance of these financial statements. |
Valuation and Qualifying Accoun
Valuation and Qualifying Accounts (Notes) | 12 Months Ended |
Feb. 03, 2017 | |
Valuation and Qualifying Accounts [Abstract] | |
Schedule of Valuation and Qualifying Accounts Disclosure | SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS Valuation and Qualifying Accounts Balance at Charged to Balance at Beginning Income Charged to End of Fiscal Year Description of Period Statement Allowance Period Trade Receivables: 2017 Allowance for doubtful accounts $ 4,484 $ 2,613 $ (965 ) $ 6,132 2016 Allowance for doubtful accounts $ 1,059 $ 4,661 $ (1,236 ) $ 4,484 2015 Allowance for doubtful accounts $ 539 $ 768 $ (248 ) $ 1,059 |
Significant Accounting Polici22
Significant Accounting Policies (Policies) | 12 Months Ended |
Feb. 03, 2017 | |
Accounting Policies [Abstract] | |
Fiscal Period, Policy | Fiscal Year The Company’s fiscal year is the 52 - or 53 -week period ending on the Friday closest to January 31. The Company refers to the fiscal years ending February 3, 2017, January 29, 2016, and January 30, 2015 as fiscal 2017, fiscal 2016, and fiscal 2015, respectively. Fiscal 2017 included 53 weeks, with the extra week included in the fourth quarter, and fiscal 2016 and fiscal 2015 included 52 weeks. |
Use of Estimates, Policy | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Estimates are revised as additional information becomes available. In the Consolidated Statements of Operations, estimates are used when accounting for revenue arrangements, determining cost of revenue, allocating cost in the form of depreciation and amortization and estimating the impact of contingencies. In the Statements of Financial Position, estimates are used in determining the valuation and recoverability of assets, such as accounts receivables, inventories, fixed assets, goodwill and other identifiable intangible assets, and estimates are used in determining the reported amounts of liabilities, such as taxes payable and the impact of contingencies, all of which also impact the Consolidated Statements of Operations. Actual results could differ from these estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents. As of February 3, 2017 and January 29, 2016 , cash and cash equivalents is comprised of cash held in bank accounts and money market funds. |
Accounts Receivable | Accounts Receivable. Trade accounts receivable are recorded at the invoiced amount, net of allowances for doubtful accounts. Accounts receivable are charged against the allowance for doubtful accounts when deemed uncollectable. Management regularly reviews the adequacy of the allowance for doubtful accounts by considering the age of each outstanding invoice, each customer’s expected ability to pay, and the collection history with each customer, when applicable, to determine whether a specific allowance is appropriate. |
Fair Value Measurements | Fair Value Measurements. The carrying amounts of the Company’s financial instruments, including cash equivalents, accounts receivable, accounts payable and accrued expenses, approximate their respective fair values due to their short-term nature. |
Inventories | Inventories. Inventories consist of finished goods, which include hardware devices such as servers, log retention devices, and appliances that are sold in connection with the Company’s multiple-element solutions offerings. Inventories are stated at lower of cost or market, with cost being determined on a first-in, first-out (FIFO) basis. |
Prepaid Maintenance and Support Agreements | Prepaid Maintenance and Support Agreements. Prepaid maintenance and support agreements represent amounts paid to third-party service providers for maintenance, support and software license agreements in connection with the Company’s obligations to provide maintenance and support services. The prepaid maintenance and support agreement balance is amortized on a straight-line basis over the contract term and is primarily recognized as a component of cost of revenue. Amounts that are expected to be amortized within one year are recorded in other current assets and the remaining balance is recorded in other non-current assets. |
Property and Equipment | Property and Equipment. Property and equipment are carried at depreciated cost. Depreciation is calculated using the straight-line method over the estimated economic lives of the assets, which range from two to five years. Leasehold improvements are amortized over the shorter of five years or the lease term. For the fiscal years ended February 3, 2017 , January 29, 2016 , and January 30, 2015 , depreciation expense was $11.7 million , $12.3 million and $11.6 million , respectively. Gains or losses related to retirements or disposition of fixed assets are recognized in the period incurred. |
Intangible Assets Including Goodwill | Intangible Assets Including Goodwill. Identifiable intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives. Finite-lived intangible assets are reviewed for triggering events on a quarterly basis. Goodwill and indefinite-lived intangible assets are tested for impairment on an annual basis in the third fiscal quarter, or sooner if an indicator of impairment occurs. To determine whether goodwill and indefinite-lived intangible assets are impaired, the Company first assesses certain qualitative factors. Based on this assessment, if it is determined more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company performs the quantitative analysis of the goodwill impairment test. The Company has determined that it has a single goodwill reporting unit, and, accordingly, for the quantitative analysis, it compares the fair value of this goodwill reporting unit to its carrying values. |
Foreign Currency Translation | Foreign Currency Translation. During the periods presented, SecureWorks primarily operated in the United States. For the majority of the Company’s international businesses, the Company has determined that the functional currency of those subsidiaries is the local currency. Accordingly, assets and liabilities for these entities are translated at current rates of exchange in effect at the balance sheet date. Revenue and expenses from these international subsidiaries are translated using the monthly average exchange rates in effect for the period in which the items occur. Foreign currency translation adjustments are included as a component of accumulated other comprehensive loss, while foreign currency transaction gains and losses are recognized in the Statements of Operations within interest and other, net. |
Deferred Offering Costs | Deferred Offering Costs. Deferred offering costs consisted primarily of direct incremental costs related to the Company’s initial public offering of its common stock. Approximately $4.3 million of deferred offering costs are included in other non-current assets in the Statements of Financial Position as of January 29, 2016, of which approximately $2.0 million of such costs were incurred prior to August 1, 2015 and were paid by Dell. Upon the completion of the initial public offering, these amounts were offset against the proceeds of the offering. |
Revenue Recognition | Revenue Recognition. SecureWorks derives revenue primarily from two sources: (1) subscription revenue related to managed security and threat intelligence solutions; and (2) professional services, including security and risk consulting and incident response solutions. Revenue is considered realized and earned when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the fee to its customer is fixed or determinable and collection of the resulting receivable is reasonably assured. Multiple-Element Arrangements Professional services contracts are typically sold separately from subscription-based solutions. For subscription offerings, revenue arrangements typically include subscription security solutions, hardware that is essential to the delivery of the service, and maintenance agreements. The nature and terms of these multiple deliverable arrangements will vary based on the customized needs of clients. A multiple-element arrangement is separated into more than one unit of accounting if both of the following criteria are met: ▪ the item has value to the client on a stand-alone basis; and ▪ if the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered item is considered probable and substantially in the Company’s control. If these criteria are not met, the arrangement is accounted for as a single unit of accounting, which would result in revenue being recognized ratably over the contract term or being deferred until the earlier of when such criteria are met or when the last undelivered element is delivered. If these criteria are met for each element, consideration is allocated to the deliverables based on its relative selling price. Subscription-Based Solutions Subscription-based arrangements typically include security solutions, the associated hardware appliance, up-front installation fees and maintenance agreements, which are all typically deferred and recognized over the life of the related agreement. The hardware appliance contains software components that do not provide customers with the right to take possession of software licenses supporting the solutions. Therefore, software is considered essential to the functionality of the associated hardware, and, accordingly, is excluded from the accounting guidance that is specific to the software industry. The Company has determined that the hardware appliance included in the subscription-based solutions arrangements does not have stand-alone value to the customer and is required to access the Company’s Counter Threat Platform. The related maintenance agreements support the associated hardware and similarly do not have stand-alone value to the customer. The related installations fees are non-refundable and also do not have stand-alone value to the customer. Therefore, SecureWorks recognizes revenue for these arrangements as a single unit of accounting. The revenue and any related costs for these deliverables are recognized ratably over the contract term, beginning on the date on which service is made available to clients. Amounts that have been invoiced, but for which the above revenue recognition criteria have not been met, are included in deferred revenue. The Company has determined that it is the primary obligor in any arrangements that include third-party hardware sold in connection with its solutions, and, accordingly, the Company recognizes this revenue on a gross basis. Professional Services Professional services consist primarily of fixed-fee and retainer based contracts. Revenue from these engagements is recognized under the proportional performance method of accounting. Revenue from time and materials-based contracts is recognized as costs are incurred at amounts represented by the agreed-upon billing amounts. The Company reports revenue net of any revenue-based taxes assessed by governmental authorities that are imposed on and concurrently with specific revenue-producing transactions. |
Deferred Revenue | Deferred Revenue. Deferred revenue represents amounts contractually billed to customers or payments received from customers for which revenue has not yet been recognized. Deferred revenue that is expected to be recognized as revenue within one year is recorded as short-term deferred revenue and the remaining portion is recorded as long-term deferred revenue. |
Cost of Revenue | Cost of Revenue. Cost of revenue consists primarily of personnel expenses, including salaries, benefits and performance-based compensation for employees who maintain the Counter Threat Platform and provide support services to clients, as well as perform other critical functions. Other expenses include depreciation of equipment and costs associated with maintenance agreements for hardware provided to clients as part of their subscription-based solutions. In addition, cost of revenue includes amortization of technology licensing fees, fees paid to contractors who supplement or support solutions offerings, maintenance fees and overhead allocations. |
Research and Development Costs | Research and Development Costs. Research and development costs are expensed as incurred. Research and development expenses include compensation and related expenses for the continued development of solutions offerings, including a portion of expenses related to the threat research team, which focuses on the identification of system vulnerabilities, data forensics and malware analysis and product management. In addition, expenses related to the development and prototype of new solutions offerings also are included in research and development costs, as well as allocated overhead. The Company’s solutions offerings have generally been developed internally. |
Sales and Marketing, General and Administrative | Sales and Marketing. Sales and marketing expense includes wages and benefits, sales commissions and related expenses for sales and marketing personnel, travel and entertainment, marketing and advertising programs, including lead generation, client advocacy events, other brand-building expenses, and allocated overhead. Advertising costs are expensed as incurred and were $12.8 million , $13.0 million , and $9.7 million for the fiscal years ended February 3, 2017 , January 29, 2016 , and January 30, 2015 , respectively. General, and Administrative. General and administrative expense primarily includes the costs of human resources and recruiting, finance and accounting, legal support, management information systems and information security systems, facilities management and other administrative functions, offset by allocations of information technology and facilities costs to other functions. |
Software Development Costs | Software Development Costs. Qualifying software costs developed for internal use are capitalized when application development begins, it is probable that the project will be completed, and the software will be used as intended. In order to expedite delivery of the Company’s security solutions, the application stage typically commences before the preliminary development stage is completed. Accordingly, no significant software development costs have been capitalized during any period presented. |
Income Taxes | Income Taxes. Current income tax expense is the amount of income taxes expected to be payable for the current year. Deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Operations in the period that includes the enactment date. The Company calculates a provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized by identifying the temporary differences arising from the different treatment of items for tax and accounting purposes. The Company provides valuation allowances for deferred tax assets, where appropriate. In assessing the need for a valuation allowance, SecureWorks considers all available evidence for each jurisdiction, including past operating results, estimates of future taxable income, and the feasibility of ongoing tax planning strategies. In the event SecureWorks determines all or part of the net deferred tax assets are not realizable in the future, it will make an adjustment to the valuation allowance that would be charged to earnings in the period such determination is made. The accounting guidance for uncertainties in income tax prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. The Company recognizes a tax benefit from an uncertain tax position in the financial statements only when it is more likely than not that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits and a consideration of the relevant taxing authority’s administrative practices and precedents. During the periods presented in the financial statements, the Company did not file separate federal tax returns, as the Company was generally included in the tax grouping of other Dell entities within the respective entity’s tax jurisdiction. The income tax benefit has been calculated using the separate return method, modified to apply the benefits for loss approach. Under the benefits for loss approach, net operating losses or other tax attributes are characterized as realized or as realizable by the Company when those attributes are utilized or expected to be utilized by other members of the Dell consolidated group. |
Commissions | Commissions. The Company defers certain commission costs that are incremental and directly related to the acquisition of a service contract. When clients pay for one or more years of service in advance, sales commissions are paid 50% in the month subsequent to the execution of the service contract and the remaining 50% over the following 12 months. The Company recognizes the sales commission expense related to the entire contract ratably over the first year of the service contract. During the fiscal years ended February 3, 2017 , January 29, 2016 , and January 30, 2015 , the Company recognized $29.4 million , $29.5 million , and $20.9 million , respectively, in commission expense. All sales commission amounts are recoverable by the Company throughout the first year of a service contract. Therefore, the portion of any sales commissions paid upon the signing of a contract, for which the related sales commission expense has not yet been recognized, is recorded as a prepaid asset and amortized to expense during the first 12 months of the contract. As of February 3, 2017 , January 29, 2016 , and January 30, 2015 , the Company had a prepaid commission balance, included in other current assets, of $1.6 million , $1.9 million and $1.6 million , respectively. The Company typically expenses sales commissions paid to strategic and distribution partners upon entering contracts for the solutions sold and recognize the revenue associated with such sales over the terms of the contracts. |
Stock-Based Compensation | Stock-Based Compensation. The Company’s compensation programs include grants under Dell’s share-based payment plans and, since the IPO date, grants under the SecureWorks Corp. 2016 Long-Term Incentive Plan. Compensation expense related to these stock-based transactions is measured and recognized in the financial statements based on fair value. In general, the fair value of each option award is estimated on the grant date using the Black-Scholes option-pricing model and a single option award approach. This model requires that at the date of grant the Company determine the fair value of the underlying common stock, the expected term of the award, the expected volatility, risk-free interest rates, and expected dividend yield. The stock-based compensation expense, net of forfeitures, is recognized using a straight-line basis over the requisite service periods of the awards, which is generally four years. The Company estimates a forfeiture rate, based on an analysis of actual historical forfeitures, to calculate stock-based compensation expense. |
Loss Contingencies | Loss Contingencies. SecureWorks is subject to the possibility of various losses arising in the ordinary course of business. An estimated loss contingency is accrued when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. The Company regularly evaluates current information available to determine whether such accruals should be adjusted and whether new accruals are required. See “Note 6–Commitments and Contingencies” for more information about these loss contingencies. |
Reclassification of Operating Expenses presented in previously issued financial statements | Reclassification Certain amounts in prior fiscal years have been reclassified to conform with the presentation in the current fiscal year. Reclassification of Operating Expenses presented in previously issued financial statements Beginning in the first quarter of fiscal 2017, the Company began presenting sales and marketing expenses and general and administrative expenses as separate financial statement lines items. Previously, selling, general and administrative were presented on a combined basis. In addition, during the fourth quarter of fiscal 2017, the Company made certain changes to the classification and presentation of operating expenses. The Company determined the changes would provide more meaningful information and increased transparency as they better reflect how management views and operates the business. The changes also better reflect industry practices and align the Company's operating expenses with those of its peers. The reclassifications are being presented retrospectively to make all periods comparable. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Intangibles - Goodwill and Other. In January 2017, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update ("ASU") 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates Step 2 of the goodwill impairment test, which required the Company to determine the implied fair value of goodwill by allocating the reporting unit's fair value to each of its assets and liabilities as if the reporting unit was acquired in a business acquisition. Instead, the updated guidance requires an entity to perform its annual or interim goodwill impairment test by comparing the fair value of the reporting unit to its carrying value, and recognizing a non-cash impairment charge for the amount by which the carrying value exceeds the reporting unit's fair value with the loss not exceeding the total amount of goodwill allocated to that reporting unit. The updated guidance is effective for the Company beginning January 1, 2020, with early adoption permitted, and will be applied on a prospective basis. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. Statement of Cash Flows - In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments - A consensus of the FASB Emerging Issues Task Force.” The update was issued with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230 and other topics. The update is effective for the Company for fiscal years beginning with the Company's 2019 fiscal year, including interim periods within those fiscal years. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. Financial Instruments - Credit Losses - In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The amendments in this update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The update is effective for the Company for fiscal years beginning with the Company's 2021 fiscal year, including interim periods within those fiscal years. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. Compensation - Stock Compensation —In March 2016, the FASB issued ASU No. 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Accounting.” The update simplifies the income tax accounting and cash flow presentation related to share-based compensation by requiring the recognition of all excess tax benefits and deficiencies directly on the income statement and classification as cash flows from operating activities on the statement of cash flows. This update also makes several changes to the accounting for forfeitures and employee tax withholding on share-based compensation. The update is effective for the Company for annual and interim periods beginning with the Company's 2018 fiscal year, and early adoption is permitted. The Company does not expect this guidance to have a material impact on its consolidated financial statements. Leases — In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which requires lessees to recognize most lease liabilities on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. The update states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The update is effective for the Company for annual and interim periods beginning with the Company's 2020 fiscal year, and early adoption is permitted. Although the Company is currently evaluating the impact of this guidance on its consolidated financial statements and related disclosures, the Company expects that most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon adoption. Balance Sheet Classifications of Deferred Taxes — In November 2015, the FASB issued an amendment to its accounting guidance related to balance sheet classification of deferred taxes in ASU 2015-17, “Income Taxes (Topic 740).” The amendment requires that deferred tax assets and liabilities be classified as noncurrent in the statement of financial position. The Company elected to early adopt this standard in the fourth quarter of fiscal 2016 on a prospective basis. Other than the reclassification of deferred tax amounts in the Consolidated Statements of Financial Position as of January 29, 2016, the amendment had no impact on the Company’s Consolidated Statements of Financial Position. Revenue from Contracts with Customers — In May 2014, the FASB issued amended guidance on the recognition of revenue from contracts with customers. The objective of the new standard is to establish a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most of the existing revenue recognition guidance, including industry-specific guidance. The new standard requires entities to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB approved a one-year deferral of the effective date of this standard. Public entities are required to adopt the new standard for fiscal years, and interim periods within those years, beginning after December 15, 2017. The new revenue standard may be applied retrospectively to each prior period presented (full retrospective method) or retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application in retained earnings (modified retrospective method). The Company currently anticipates adopting this standard retrospectively to each period presented for the fiscal year beginning February 3, 2018. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. |
Significant Accounting Polici23
Significant Accounting Policies (Tables) | 12 Months Ended |
Feb. 03, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Error Corrections and Prior Period Adjustments | The following table presents the Company’s operating expenses as previously reported, and as currently reclassified, on its Consolidated Statements of Operations for each of the fiscal years noted below: Fiscal Year Ended January 29, 2016 Fiscal Year Ended January 30, 2015 As As As As Reported Reclassification Reclassified Reported Reclassification Reclassified Statements of Operations Data: Selling, general and administrative $ 211,974 $ (211,974 ) — $ 146,324 $ (146,324 ) — Research and development 49,747 19,851 69,598 32,053 13,039 45,092 Sales and marketing — 111,978 111,978 — 85,046 85,046 General and administrative — 80,145 80,145 — 48,239 48,239 Total operating expenses $ 261,721 $ — $ 261,721 $ 178,377 $ — $ 178,377 The following presents the reclassifications to the previously reported Consolidated Statements of Operations for the quarterly periods in the fiscal years ended February 3, 2017 and January 29, 2016 as presented in the Company's quarterly reports on Form 10-Q filed for quarterly periods in fiscal 2017, except for information for the three months ended January 29, 2016, as noted below. See Note 2 for discussion of the nature of such reclassifications. Research and Development Sale and Marketing General and Administrative Total Operating Expense Fiscal Year 2017 Three months ended April 29, 2016 As stated $ 13,596 $ 27,496 $ 27,852 $ 68,944 Reclassification 4,001 2,766 (6,767 ) — As reclassified $ 17,597 $ 30,262 $ 21,085 $ 68,944 July 29, 2016 As stated $ 12,848 $ 28,639 $ 29,306 $ 70,793 Reclassification 4,525 3,181 (7,706 ) — As reclassified $ 17,373 $ 31,820 $ 21,600 $ 70,793 October 28, 2016 As stated $ 12,181 $ 26,424 $ 29,709 $ 68,314 Reclassification 4,782 3,301 (8,083 ) — As reclassified $ 16,963 $ 29,725 $ 21,626 $ 68,314 Research and Sales and General and Total Operating Fiscal Year 2016 Development Marketing Administrative Expense Three months ended May 1, 2015 As stated $ 11,830 $ 22,119 $ 25,784 $ 59,733 Reclassification 5,100 2,057 (7,157 ) — As reclassified $ 16,930 $ 24,176 $ 18,627 $ 59,733 July 31, 2015 As stated $ 12,643 $ 26,696 $ 28,148 $ 67,487 Reclassification 4,941 2,514 (7,455 ) — As reclassified $ 17,584 $ 29,210 $ 20,693 $ 67,487 October 30, 2015 As stated $ 12,230 $ 27,109 $ 28,228 $ 67,567 Reclassification 4,757 2,526 (7,283 ) — As reclassified $ 16,987 $ 29,635 $ 20,945 $ 67,567 January 29, 2016 As stated (1) $ 13,045 $ — $ 53,889 $ 66,934 Reclassification 5,052 28,957 (34,009 ) — As reclassified $ 18,097 $ 28,957 $ 19,880 $ 66,934 (1) As disclosed in the Company's registration statement on Form S-1/A filed April 11, 2016 in connection with the IPO. Prior to the filing of the Company's Quarterly Report on Form 10-Q for the period ended April 29, 2016, the Company presented sales and marketing expense on a combined basis with general and administrative expense. |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 12 Months Ended |
Feb. 03, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth the computation of net loss per common share (in thousands, except per share amounts): Fiscal Years Ended February 3, 2017 January 29, 2016 January 30, 2015 Numerator: Net loss $ (38,213 ) $ (72,381 ) $ (38,490 ) Denominator: Weighted-average number of shares outstanding: Basic and Diluted 77,635 70,000 70,000 Loss per common share: Basic and Diluted $ (0.49 ) $ (1.03 ) $ (0.55 ) Weighted-average anti-dilutive stock options, non-vested restricted stock and restricted stock units 3,806 — — |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Feb. 03, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Indefinite-Lived Intangible Assets | The Company's intangible assets at February 3, 2017 and January 29, 2016 were as follows: February 3, 2017 January 29, 2016 Gross Accumulated Amortization Net Gross Accumulated Amortization Net (in thousands) Customer relationships $ 189,518 $ (48,963 ) $ 140,555 $ 189,518 $ (34,869 ) $ 154,649 Technology 135,584 (44,336 ) 91,248 135,584 (30,694 ) 104,890 Finite-lived intangible assets 325,102 (93,299 ) 231,803 325,102 (65,563 ) 259,539 Trade name 30,118 — 30,118 30,118 — 30,118 Total intangible assets $ 355,220 $ (93,299 ) $ 261,921 $ 355,220 $ (65,563 ) $ 289,657 |
Schedule of Finite-Lived Intangible Assets | The Company's intangible assets at February 3, 2017 and January 29, 2016 were as follows: February 3, 2017 January 29, 2016 Gross Accumulated Amortization Net Gross Accumulated Amortization Net (in thousands) Customer relationships $ 189,518 $ (48,963 ) $ 140,555 $ 189,518 $ (34,869 ) $ 154,649 Technology 135,584 (44,336 ) 91,248 135,584 (30,694 ) 104,890 Finite-lived intangible assets 325,102 (93,299 ) 231,803 325,102 (65,563 ) 259,539 Trade name 30,118 — 30,118 30,118 — 30,118 Total intangible assets $ 355,220 $ (93,299 ) $ 261,921 $ 355,220 $ (65,563 ) $ 289,657 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Estimated future pre-tax amortization expense of finite-lived intangible assets as of January 29, 2016 over the next five years and thereafter is as follows: Fiscal Years (in thousands) 2018 $ 27,736 2019 27,736 2020 27,736 2021 27,736 2022 27,736 Thereafter 93,123 Total $ 231,803 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Feb. 03, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | As of February 3, 2017 , the purchase obligations and future minimum payments under the Company's operating leases are as follows: Payments Due For Operating Purchase Credit Facilities Fiscal Years Ending Leases Obligations and Other (1) Total 2018 $ 4,536 $ 9,346 $ 1,923 $ 15,805 2019 4,268 1,371 1,123 6,762 2020 3,759 1,080 — 4,839 2021 1,241 739 — 1,980 2022 938 — — 938 2023 and beyond 246 — — 246 Total $ 14,988 $ 12,536 $ 3,046 $ 30,570 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Feb. 03, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The weighted assumptions utilized for valuation of options under this model as well as the weighted-average grant date fair value of stock options granted during the fiscal year ended February 3, 2017 are summarized below. Fiscal Year Ended February 3, 2017 Expected life 6.3 years Risk-free interest rate 1.68% Volatility 44.74% Dividend yield —% Expected forfeiture rate 6.12% Weighted-average grant-date fair value $6.15 |
Schedule of Share-based Compensation, Stock Options, Activity | The following table summarizes stock option activity and options outstanding and exercisable for the fiscal year ended, and as of, February 3, 2017 : Number of Options Weighted- Weighted- Weighted-Average Grant date Fair Value Per Share Aggregate Intrinsic Value (in thousands) Balance, January 29, 2016 — $ — — $ — — Granted 2,960,419 $ 14.00 8.77 $ 6.15 $ — Exercised — $ — — — Canceled, expired or forfeited (382,252 ) $ 14.00 — $ 6.34 — Balance, February 3, 2017 2,578,167 $ 14.00 9.22 $ 6.12 $ — Options expected to vest, February 3, 2017 2,414,550 $ 14.00 9.22 $ 6.11 $ — Options exercisable, February 3, 2017 — $ — — $ — $ — |
Schedule of Nonvested Restricted Stock Units Activity | The following table summarizes activity for restricted stock and restricted stock units for the fiscal year ended, and as of, February 3, 2017 . Number of Shares Weighted- Average Grant Date Fair Value Per Share Weighted- Aggregate Intrinsic Value (in thousands) Balance, January 29, 2016 — $ — — $ — Granted 2,460,594 $ 13.28 1.71 $ 26,058 Vested (2,143 ) $ 14.00 — — Forfeited (215,965 ) $ 14.00 — — Converted — — — — Balance, February 3, 2017 2,242,486 $ 13.21 1.88 $ 23,748 Restricted stock and restricted stock units expected to vest, February 3, 2017 2,050,166 $ 13.22 2.05 $ 21,711 |
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs | The following table summarizes the classification of stock-based compensation expense related to stock options, restricted stock and restricted stock units for the fiscal years ended February 3, 2017 , January 29, 2016 and January 30, 2015 . Stock-based compensation expense for the periods prior to fiscal 2017 related solely to grants under the Denali Holding Inc. 2013 Stock Incentive Plan awarded to two of the Company's executive officers. Fiscal Years Ended February 3, January 29, January 30, (in thousands) Cost of revenue $ 462 $ — $ — Research and development 2,033 277 259 Sales and marketing 1,068 — — General and administrative 5,320 564 526 Total stock-based compensation expense $ 8,883 $ 841 $ 785 |
Income and Other Taxes (Tables)
Income and Other Taxes (Tables) | 12 Months Ended |
Feb. 03, 2017 | |
Income Tax Disclosure [Abstract] | |
Effective Income Tax Rate Reconciliation | The Company’s effective income tax rate for the fiscal years ended February 3, 2017 , January 29, 2016 , and January 30, 2015 was as follows: Fiscal Years Ended February 3, 2017 January 29, 2016 January 30, 2015 Loss before income taxes $ (63,477 ) $ (112,577 ) $ (61,235 ) Income tax benefit $ (25,264 ) $ (40,196 ) $ (22,745 ) Effective tax rate 39.8 % 35.7 % 37.1 % A reconciliation of the Company's income tax provision to the statutory U.S. federal tax rate is as follows: Fiscal Year Ended February 3, 2017 January 29, 2016 January 30, 2015 U.S. federal statutory rate 35.0 % 35.0 % 35.0 % Foreign income taxed at different rates (0.3 ) (0.9 ) (0.7 ) State income taxes, net of federal tax benefit 3.2 1.9 2.8 Research and development credits 3.1 0.5 — Nondeductible/nontaxable items (1.2 ) (0.8 ) — Total 39.8 % 35.7 % 37.1 % |
Components of Income Tax Benefits | The benefit for income taxes consists of the following: Fiscal Years Ended February 3, 2017 January 29, 2016 January 30, 2015 (in thousands) Current: Federal $ (22,470 ) $ (12,519 ) $ (7,552 ) State/Local 657 (1,517 ) (585 ) Foreign 1,379 (1,366 ) (383 ) Current (20,434 ) (15,402 ) (8,520 ) Deferred: Federal (3,620 ) (24,472 ) (12,970 ) State/Local (471 ) 330 (1,172 ) Foreign (739 ) (652 ) (83 ) Deferred (4,830 ) (24,794 ) (14,225 ) Income tax benefit $ (25,264 ) $ (40,196 ) $ (22,745 ) |
Loss Before Provision For Income Taxes | Loss before provision for income taxes consists of the following: Fiscal Years Ended February 3, 2017 January 29, 2016 January 30, 2015 (in thousands) Domestic $ (64,542 ) $ (103,061 ) $ (58,641 ) Foreign 1,065 (9,516 ) (2,594 ) Loss before income taxes $ (63,477 ) $ (112,577 ) $ (61,235 ) |
Components of Deferred Tax Assets | The components of the Company's net deferred tax balances are as follows: February 3, 2017 January 29, 2016 (in thousands) Deferred tax assets: Deferred revenue $ 6,232 $ 5,231 Provision for doubtful accounts 2,377 874 Credit carryforwards — 480 Loss carryforwards 2,806 18,509 Stock-based and deferred compensation 9,568 6,443 Deferred tax assets 20,983 31,537 Valuation allowance (2,806 ) (2,438 ) Deferred tax assets, net of valuation allowance 18,177 29,099 Deferred tax liabilities: Property and equipment (1,367 ) (192 ) Purchased intangible assets (97,836 ) (107,901 ) Operating and compensation related accruals (3,933 ) (7,855 ) Other (29 ) (732 ) Deferred tax liabilities (103,165 ) (116,680 ) Net deferred tax liabilities $ (84,988 ) $ (87,581 ) |
Selected Financial Informatio29
Selected Financial Information (Tables) | 12 Months Ended |
Feb. 03, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Accounts Receivable, Long-Lived Assets, Other Assets and Other Liabilities | The following table provides information on amounts included in accounts receivable, net, other current assets, property and equipment, net, accrued and other current liabilities, and other non-current liabilities as of February 3, 2017 and January 29, 2016 . Consolidated February 3, 2017 January 29, 2016 (in thousands) Accounts receivable, net: Gross accounts receivable $ 119,678 $ 120,841 Allowance for doubtful accounts (6,132 ) (4,484 ) Total $ 113,546 $ 116,357 Other current assets: Income tax receivable 25,091 — Prepaid maintenance and support agreements 16,107 17,736 Prepaid other 10,749 8,475 Total $ 51,947 $ 26,211 Property and equipment, net Computer equipment $ 47,407 $ 29,001 Leasehold improvements 16,986 15,470 Other equipment 1,358 966 Total property and equipment 65,751 45,437 Accumulated depreciation $ (34,598 ) $ (22,671 ) Total $ 31,153 $ 22,766 Other noncurrent assets Prepaid maintenance agreements 2,304 1,700 Deferred tax asset 1,503 709 Deferred IPO costs — 4,329 Other 1,897 2,598 Total $ 5,704 $ 9,336 Accrued and other current liabilities Compensation $ 36,803 $ 29,439 Intercompany payable, net 9,052 21,691 Other 13,849 9,277 Total $ 59,704 $ 60,407 Other non-current liabilities Deferred tax liabilities $ 86,491 $ 88,290 Intercompany payable, net 1,100 — Other 1,801 2,694 Total $ 89,392 $ 90,984 |
Net Revenue And Property, Plant, And Equipment | The following tables present net revenue and property, plant and equipment allocated between the United States and foreign countries: Fiscal Year Ended February 3, 2017 January 29, 2016 January 30, 2015 Net revenue United States $ 374,254 $ 298,984 $ 230,309 Foreign Countries 55,248 40,538 31,821 Total $ 429,502 $ 339,522 $ 262,130 February 3, 2017 January 29, 2016 Property and equipment, net United States $ 26,916 $ 20,453 Foreign Countries 4,237 2,313 Total $ 31,153 $ 22,766 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Feb. 03, 2017 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | As a result of the foregoing related party arrangements beginning in the third quarter of fiscal 2016, the Company has recorded the following related party balances in the Consolidated Statement of Financial Position as of February 3, 2017 and January 29, 2016 . During the third quarter of fiscal 2017, the Company began settling in cash its related party balances with Dell, which resulted in a net intercompany payable. February 3, 2017 January 29, 2016 (in thousands) Intercompany receivable $ 1,680 $ 19,496 Intercompany payable (11,832 ) (41,187 ) Net intercompany payable (in accrued and other) $ (10,152 ) $ (21,691 ) Accounts receivable from clients under reseller agreements with Dell (in accounts receivable, net) $ 16,658 $ 15,552 Net operating loss tax sharing receivable under agreement with Dell (in other current assets at February 3, 2017 and other non-current liabilities at January 29, 2016) $ 25,091 $ 18,509 |
Unaudited Quarterly Results o31
Unaudited Quarterly Results of Operations (Tables) | 12 Months Ended |
Feb. 03, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | The following table presents selected unaudited Statements of Operations for each quarter of fiscal 2017 and fiscal 2016: Fiscal Year 2017 First Second Third Fourth Quarter Quarter Quarter Quarter Net revenue $ 99,793 $ 103,653 $ 107,108 $ 118,948 Gross margin $ 49,944 $ 50,746 $ 53,471 $ 62,742 Net loss $ (11,627 ) $ (12,051 ) $ (7,718 ) $ (6,817 ) Net loss per common share (basic and diluted) (1) $ (0.17 ) $ (0.15 ) $ (0.10 ) $ (0.09 ) Weighted-average common shares outstanding (basic and diluted 70,330 80,009 80,009 80,009 Fiscal Year 2016 First Second Third Fourth Quarter Quarter Quarter Quarter Net revenue $ 77,399 $ 79,855 $ 88,187 $ 94,081 Gross margin $ 33,403 $ 35,138 $ 42,722 $ 44,450 Net loss $ (17,830 ) $ (21,124 ) $ (18,528 ) $ (14,899 ) Net loss per common share (basic and diluted) (1) $ (0.25 ) $ (0.30 ) $ (0.26 ) $ (0.21 ) Weighted-average common shares outstanding (basic and diluted) 70,000 70,000 70,000 70,000 (1) Basic and diluted net loss per common share are computed independently for each of the quarters presented. Therefore, the sum of the quarterly basic and diluted net loss per common share amounts may not equal the annual basic and diluted net loss per common share amounts. |
Schedule of Error Corrections and Prior Period Adjustments | The following table presents the Company’s operating expenses as previously reported, and as currently reclassified, on its Consolidated Statements of Operations for each of the fiscal years noted below: Fiscal Year Ended January 29, 2016 Fiscal Year Ended January 30, 2015 As As As As Reported Reclassification Reclassified Reported Reclassification Reclassified Statements of Operations Data: Selling, general and administrative $ 211,974 $ (211,974 ) — $ 146,324 $ (146,324 ) — Research and development 49,747 19,851 69,598 32,053 13,039 45,092 Sales and marketing — 111,978 111,978 — 85,046 85,046 General and administrative — 80,145 80,145 — 48,239 48,239 Total operating expenses $ 261,721 $ — $ 261,721 $ 178,377 $ — $ 178,377 The following presents the reclassifications to the previously reported Consolidated Statements of Operations for the quarterly periods in the fiscal years ended February 3, 2017 and January 29, 2016 as presented in the Company's quarterly reports on Form 10-Q filed for quarterly periods in fiscal 2017, except for information for the three months ended January 29, 2016, as noted below. See Note 2 for discussion of the nature of such reclassifications. Research and Development Sale and Marketing General and Administrative Total Operating Expense Fiscal Year 2017 Three months ended April 29, 2016 As stated $ 13,596 $ 27,496 $ 27,852 $ 68,944 Reclassification 4,001 2,766 (6,767 ) — As reclassified $ 17,597 $ 30,262 $ 21,085 $ 68,944 July 29, 2016 As stated $ 12,848 $ 28,639 $ 29,306 $ 70,793 Reclassification 4,525 3,181 (7,706 ) — As reclassified $ 17,373 $ 31,820 $ 21,600 $ 70,793 October 28, 2016 As stated $ 12,181 $ 26,424 $ 29,709 $ 68,314 Reclassification 4,782 3,301 (8,083 ) — As reclassified $ 16,963 $ 29,725 $ 21,626 $ 68,314 Research and Sales and General and Total Operating Fiscal Year 2016 Development Marketing Administrative Expense Three months ended May 1, 2015 As stated $ 11,830 $ 22,119 $ 25,784 $ 59,733 Reclassification 5,100 2,057 (7,157 ) — As reclassified $ 16,930 $ 24,176 $ 18,627 $ 59,733 July 31, 2015 As stated $ 12,643 $ 26,696 $ 28,148 $ 67,487 Reclassification 4,941 2,514 (7,455 ) — As reclassified $ 17,584 $ 29,210 $ 20,693 $ 67,487 October 30, 2015 As stated $ 12,230 $ 27,109 $ 28,228 $ 67,567 Reclassification 4,757 2,526 (7,283 ) — As reclassified $ 16,987 $ 29,635 $ 20,945 $ 67,567 January 29, 2016 As stated (1) $ 13,045 $ — $ 53,889 $ 66,934 Reclassification 5,052 28,957 (34,009 ) — As reclassified $ 18,097 $ 28,957 $ 19,880 $ 66,934 (1) As disclosed in the Company's registration statement on Form S-1/A filed April 11, 2016 in connection with the IPO. Prior to the filing of the Company's Quarterly Report on Form 10-Q for the period ended April 29, 2016, the Company presented sales and marketing expense on a combined basis with general and administrative expense. |
Description of the Business a32
Description of the Business and Basis of Presentation (Details) | Apr. 27, 2016shares | Nov. 24, 2015$ / sharesshares | Jan. 31, 2016shares | Feb. 03, 2017segment$ / sharesshares | Apr. 22, 2016$ / sharesshares | Apr. 08, 2016shares | Jan. 29, 2016$ / sharesshares |
Class of Stock [Line Items] | |||||||
Number of reportable segments | segment | 1 | ||||||
Preferred stock, shares authorized (in shares) | 200,000,000 | 200,000,000 | 200,000,000 | ||||
Preferred stock, par value (usd per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | ||||
Common Stock, Class B | |||||||
Class of Stock [Line Items] | |||||||
Common stock, shares authorized (in shares) | 1,000 | 500,000,000 | 500,000,000 | 500,000,000 | |||
Common stock, par value (usd per share) | $ / shares | $ 0.01 | $ 0.01 | |||||
Common stock, shares outstanding (in shares) | 70,000,000 | 70,000,000 | |||||
Stock split | 70,000 | ||||||
Common Class A | |||||||
Class of Stock [Line Items] | |||||||
Common stock, shares authorized (in shares) | 1,000 | 2,500,000,000 | 2,500,000,000 | 2,500,000,000 | |||
Common stock, par value (usd per share) | $ / shares | $ 0.01 | $ 0.01 | |||||
Shares issued (in shares) | 8,000,000 | ||||||
Common stock, shares outstanding (in shares) | 10,566,000 | ||||||
Predecessor | |||||||
Class of Stock [Line Items] | |||||||
Common stock, shares authorized (in shares) | 1,000 | ||||||
Common stock, par value (usd per share) | $ / shares | $ 0.01 | ||||||
Shares issued (in shares) | 1,000 | ||||||
Common stock, shares outstanding (in shares) | 1,000 | ||||||
Successor | Common Stock, Class B | |||||||
Class of Stock [Line Items] | |||||||
Common stock, shares authorized (in shares) | 1,000 | ||||||
Common stock, par value (usd per share) | $ / shares | $ 0.01 | ||||||
Shares issued (in shares) | 1,000 | ||||||
Common stock, shares outstanding (in shares) | 1,000 | ||||||
Successor | Common Class A | |||||||
Class of Stock [Line Items] | |||||||
Common stock, shares authorized (in shares) | 1,000 | ||||||
Common stock, par value (usd per share) | $ / shares | $ 0.01 | ||||||
IPO | Denali | |||||||
Class of Stock [Line Items] | |||||||
Percent of outstanding shares owned | 86.90% | ||||||
Percent of voting interests owned | 98.50% |
Description of the Business a33
Description of the Business and Basis of Presentation - Initial Public Offering (Details) - USD ($) $ / shares in Units, $ in Thousands | Apr. 27, 2016 | Feb. 03, 2017 | Jan. 29, 2016 | Jan. 30, 2015 |
Class of Stock [Line Items] | ||||
Proceeds from initial public offering | $ 99,604 | $ 0 | $ 0 | |
Underwriting discounts and commissions and unpaid offering expenses | $ 12,400 | |||
Common Class A | ||||
Class of Stock [Line Items] | ||||
Shares issued (in shares) | 8,000,000 | |||
Price per share (usd per share) | $ 14 | |||
Proceeds from initial public offering | $ 99,600 | |||
Common Class A | Common Stock | ||||
Class of Stock [Line Items] | ||||
Shares issued (in shares) | 8,000,000 | |||
Conversion of convertible notes to common stock in connection with initial public offering (in shares) | 2,008,924 | 2,009,000 |
Description of the Business a34
Description of the Business and Basis of Presentation - Out of Period Adjustments (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 03, 2017 | Oct. 28, 2016 | Jul. 29, 2016 | Apr. 29, 2016 | Jan. 29, 2016 | Oct. 30, 2015 | Jul. 31, 2015 | May 01, 2015 | Feb. 03, 2017 | Jan. 29, 2016 | Jan. 30, 2015 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||
Loss before income taxes | $ 63,477 | $ 112,577 | $ 61,235 | ||||||||
Net loss | $ 6,817 | $ 7,718 | $ 12,051 | $ 11,627 | $ 14,899 | $ 18,528 | $ 21,124 | $ 17,830 | $ 38,213 | 72,381 | $ 38,490 |
Immaterial Errors | |||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||
Loss before income taxes | (3,700) | ||||||||||
Net loss | $ (2,400) |
Significant Accounting Polici35
Significant Accounting Policies (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2017 | Jan. 29, 2016 | Jan. 30, 2015 | |
Property and equipment, net | |||
Allowance for doubtful accounts | $ 6,100 | $ 4,500 | |
Unbilled accounts receivable | 9,400 | 10,500 | |
Depreciation | 11,700 | 12,300 | $ 11,600 |
Effects of exchange rate changes on monetary assets and liabilities denominated in foreign currencies | (2,239) | 836 | 137 |
Advertising expenses | 12,800 | 13,000 | 9,700 |
Commission expense | 29,400 | 29,500 | 20,900 |
Prepaid commission | $ 1,600 | 1,900 | $ 1,600 |
Weighted-average remaining requisite period | 4 years | ||
Minimum | |||
Property and equipment, net | |||
Useful life | 2 years | ||
Maximum | |||
Property and equipment, net | |||
Useful life | 5 years | ||
Leasehold Improvements | Maximum | |||
Property and equipment, net | |||
Useful life | 5 years | ||
Other Noncurrent Assets | |||
Property and equipment, net | |||
Deferred IPO costs | 4,300 | ||
Principal Owner | Dell Inc. | |||
Property and equipment, net | |||
Deposits | $ 2,000 |
Significant Accounting Polici36
Significant Accounting Policies Reclassifications (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Oct. 28, 2016 | Jul. 29, 2016 | Apr. 29, 2016 | Jan. 29, 2016 | Oct. 30, 2015 | Jul. 31, 2015 | May 01, 2015 | Feb. 03, 2017 | Jan. 29, 2016 | Jan. 30, 2015 | |
Property and equipment, net | ||||||||||
Selling, general and administrative | $ 0 | $ 0 | ||||||||
Research and development | $ 16,963 | $ 17,373 | $ 17,597 | $ 18,097 | $ 16,987 | $ 17,584 | $ 16,930 | $ 71,030 | 69,598 | 45,092 |
Sales and marketing | 29,725 | 31,820 | 30,262 | 28,957 | 29,635 | 29,210 | 24,176 | 124,950 | 111,978 | 85,046 |
General and administrative | 21,626 | 21,600 | 21,085 | 19,880 | 20,945 | 20,693 | 18,627 | 86,876 | 80,145 | 48,239 |
Total operating expenses | 68,314 | 70,793 | 68,944 | 66,934 | 67,567 | 67,487 | 59,733 | $ 282,856 | 261,721 | 178,377 |
Scenario, Previously Reported | ||||||||||
Property and equipment, net | ||||||||||
Selling, general and administrative | 211,974 | 146,324 | ||||||||
Research and development | 12,181 | 12,848 | 13,596 | 13,045 | 12,230 | 12,643 | 11,830 | 49,747 | 32,053 | |
Sales and marketing | 26,424 | 28,639 | 27,496 | 0 | 27,109 | 26,696 | 22,119 | 0 | 0 | |
General and administrative | 29,709 | 29,306 | 27,852 | 53,889 | 28,228 | 28,148 | 25,784 | 0 | 0 | |
Total operating expenses | 68,314 | 70,793 | 68,944 | 66,934 | 67,567 | 67,487 | 59,733 | 261,721 | 178,377 | |
Restatement Adjustment | ||||||||||
Property and equipment, net | ||||||||||
Selling, general and administrative | (211,974) | (146,324) | ||||||||
Research and development | 4,782 | 4,525 | 4,001 | 5,052 | 4,757 | 4,941 | 5,100 | 19,851 | 13,039 | |
Sales and marketing | 3,301 | 3,181 | 2,766 | 28,957 | 2,526 | 2,514 | 2,057 | 111,978 | 85,046 | |
General and administrative | (8,083) | (7,706) | (6,767) | (34,009) | (7,283) | (7,455) | (7,157) | 80,145 | 48,239 | |
Total operating expenses | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Net Loss Per Share (Details)
Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 03, 2017 | Oct. 28, 2016 | Jul. 29, 2016 | Apr. 29, 2016 | Jan. 29, 2016 | Oct. 30, 2015 | Jul. 31, 2015 | May 01, 2015 | Feb. 03, 2017 | Jan. 29, 2016 | Jan. 30, 2015 | |
Earnings Per Share [Abstract] | |||||||||||
Net loss | $ (6,817) | $ (7,718) | $ (12,051) | $ (11,627) | $ (14,899) | $ (18,528) | $ (21,124) | $ (17,830) | $ (38,213) | $ (72,381) | $ (38,490) |
Weighted average number of shares outstanding, basic and diluted (in shares) | 80,009 | 80,009 | 80,009 | 70,330 | 70,000 | 70,000 | 70,000 | 70,000 | 77,635 | 70,000 | 70,000 |
Loss per common share, basic and diluted (usd per share) | $ (0.09) | $ (0.10) | $ (0.15) | $ (0.17) | $ (0.21) | $ (0.26) | $ (0.30) | $ (0.25) | $ (0.49) | $ (1.03) | $ (0.55) |
Weighted-average anti-dilutive stock options, non-vested restricted stock and restricted stock units (in shares) | 3,806 | 0 | 0 |
Goodwill and Intangible Asset38
Goodwill and Intangible Assets Goodwill (Details) - USD ($) $ in Thousands | Feb. 03, 2017 | Jan. 29, 2016 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 416,487 | $ 416,487 |
Goodwill and Intangible Asset39
Goodwill and Intangible Assets Intangible Assets (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Feb. 03, 2017 | Feb. 03, 2017 | Jan. 29, 2016 | Jan. 30, 2015 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Gross | $ 325,102,000 | $ 325,102,000 | $ 325,102,000 | |
Accumulated Amortization | (93,299,000) | (93,299,000) | (65,563,000) | |
Total | 231,803,000 | 231,803,000 | 259,539,000 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||||
Gross | 355,220,000 | 355,220,000 | 355,220,000 | |
Accumulated Amortization | (93,299,000) | (93,299,000) | (65,563,000) | |
Net | 261,921,000 | 261,921,000 | 289,657,000 | |
Amortization expense | 27,700,000 | 28,300,000 | $ 29,800,000 | |
Impairment charges | 0 | 0 | $ 0 | |
Trade name | ||||
Indefinite-lived Intangible Assets [Line Items] | ||||
Indefinite-lived intangible assets | 30,118,000 | 30,118,000 | 30,118,000 | |
Customer relationships | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Gross | 189,518,000 | 189,518,000 | 189,518,000 | |
Accumulated Amortization | (48,963,000) | (48,963,000) | (34,869,000) | |
Total | 140,555,000 | 140,555,000 | 154,649,000 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||||
Accumulated Amortization | (48,963,000) | (48,963,000) | (34,869,000) | |
Technology | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Gross | 135,584,000 | 135,584,000 | 135,584,000 | |
Accumulated Amortization | (44,336,000) | (44,336,000) | (30,694,000) | |
Total | 91,248,000 | 91,248,000 | 104,890,000 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||||
Accumulated Amortization | $ (44,336,000) | $ (44,336,000) | $ (30,694,000) |
Goodwill and Intangible Asset40
Goodwill and Intangible Assets Estimated Future Amortization Expense (Details) - USD ($) $ in Thousands | Feb. 03, 2017 | Jan. 29, 2016 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2,018 | $ 27,736 | |
2,019 | 27,736 | |
2,020 | 27,736 | |
2,021 | 27,736 | |
2,022 | 27,736 | |
Thereafter | 93,123 | |
Total | $ 231,803 | $ 259,539 |
Debt (Details)
Debt (Details) - USD ($) | Mar. 28, 2017 | Apr. 27, 2016 | Nov. 02, 2015 | Feb. 03, 2017 | Jan. 29, 2016 | Jan. 30, 2015 | Sep. 14, 2015 | Aug. 03, 2015 | Jun. 30, 2015 |
Debt Instrument [Line Items] | |||||||||
Conversion of convertible notes to common stock | $ 28,125,000 | $ 0 | $ 0 | ||||||
Common Stock, Class A | |||||||||
Debt Instrument [Line Items] | |||||||||
Price per share (usd per share) | $ 14 | ||||||||
Convertible Notes Payable | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum principal amount of convertible notes to be sold | $ 500,000 | $ 22,000,000 | $ 25,000,000 | ||||||
Convertible notes outstanding | $ 22,500,000 | ||||||||
Fair value of convertible debt | 28,000,000 | ||||||||
Conversion of convertible notes to common stock | $ 28,100,000 | ||||||||
Change in fair value | $ 100,000 | $ 5,500,000 | |||||||
Convertible Notes Payable | Common Stock, Class A | |||||||||
Debt Instrument [Line Items] | |||||||||
Shares issued in conversion (in shares) | 2,008,924 | ||||||||
Convertible notes | $ 22,500,000 | ||||||||
Conversion price (usd per share) | $ 11.20 | ||||||||
Conversion price, percent of IPO price | 80.00% | ||||||||
Price per share (usd per share) | $ 14 | ||||||||
Line of Credit | Revolving Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 30,000,000 | ||||||||
Initial term | 1 year | ||||||||
Line of credit, outstanding balance | $ 0 | ||||||||
Unused capacity, commitment fee percentage | 0.35% | ||||||||
Commitment fee | $ 80,000 | ||||||||
Line of Credit | Revolving Credit Facility | London Interbank Offered Rate (LIBOR) | |||||||||
Debt Instrument [Line Items] | |||||||||
Basis spread on variable rate | 1.60% | ||||||||
Subsequent Event | Line of Credit | Revolving Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Maximum borrowing capacity | $ 30,000,000 | ||||||||
Additional borrowing capacity | $ 30,000,000 | ||||||||
Extension of term | 1 year |
Commitments and Contingencies F
Commitments and Contingencies Future Minimum Lease Payments (Details) $ in Thousands | Feb. 03, 2017USD ($) |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
Operating leases, 2018 | $ 4,536 |
Operating leases, 2019 | 4,268 |
Operating leases, 2020 | 3,759 |
Operating leases, 2021 | 1,241 |
Operating leases, 2022 | 938 |
Operating leases, 2023 and beyond | 246 |
Operating leases, total | 14,988 |
Purchase Obligation, Fiscal Year Maturity [Abstract] | |
Purchase obligation, 2018 | 9,346 |
Purchase obligation, 2019 | 1,371 |
Purchase obligation, 2020 | 1,080 |
Purchase obligation, 2021 | 739 |
Purchase obligation, 2022 | 0 |
Purchase obligation, 2023 and beyond | 0 |
Purchase obligation, total | 12,536 |
Other Commitment, Fiscal Year Maturity [Abstract] | |
Other commitment, 2018 | 1,923 |
Other commitment, 2019 | 1,123 |
Other commitment, 2020 | 0 |
Other commitment, 2021 | 0 |
Other commitment, 2022 | 0 |
Other commitment, 2023 and beyond | 0 |
Other commitment, total | 3,046 |
Total Obligations and Commitments, Fiscal Year Maturity [Abstract] | |
Total obligations and commitments, 2018 | 15,805 |
Total obligations and commitments, 2019 | 6,762 |
Total obligations and commitments, 2020 | 4,839 |
Total obligations and commitments, 2021 | 1,980 |
Total obligations and commitments, 2022 | 938 |
Total obligations and commitments, 2023 and beyond | 246 |
Total obligations and commitments, total | $ 30,570 |
Commitments and Contingencies43
Commitments and Contingencies (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 03, 2017 | Jan. 29, 2016 | Jan. 30, 2015 | |
Concentration Risk [Line Items] | |||
Rent expense | $ 3.9 | $ 3 | $ 2.7 |
Customer Concentration Risk | Sales Revenue | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 12.00% |
Stock-Based Compensation Narrat
Stock-Based Compensation Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | Apr. 27, 2016 | Apr. 18, 2016 | Feb. 03, 2017 | Oct. 28, 2016 | Feb. 03, 2017 | Jan. 29, 2016 | Jan. 30, 2015 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Equity instruments other than options, outstanding (in shares) | 2,460,594 | ||||||
Total stock-based compensation expense | $ 8,883 | $ 841 | $ 785 | ||||
Weighted-average remaining requisite period | 4 years | ||||||
Equity instruments other than options, granted, fair value (usd per share) | $ 13.28 | ||||||
Employer matching contribution, percent of match | 100.00% | ||||||
Employer matching contribution, percent of employees' gross pay | 5.00% | ||||||
Contribution plan expense | $ 9,400 | $ 6,700 | 5,300 | ||||
Employee Stock Option | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Options outstanding, weighted-average contractual life (years) | 9 years 2 months 21 days | ||||||
Price per share (usd per share) | $ 14 | ||||||
Total stock-based compensation expense | $ 2,900 | ||||||
Tax benefit related to stock-based compensation expense | 1,200 | ||||||
Compensation cost not yet recognized | $ 11,800 | $ 11,800 | |||||
Weighted-average remaining requisite period | 3 years 6 months 5 days | ||||||
Exercises in period (in shares) | 0 | ||||||
Options outstanding (in shares) | 2,578,167 | 2,578,167 | 0 | ||||
Employee Stock Option | Employee | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Equity instruments other than options, outstanding (in shares) | 2,669,788 | ||||||
Price per share (usd per share) | $ 14 | ||||||
Stock options vesting period | 4 years | ||||||
Employee Stock Option | Director | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Equity instruments other than options, outstanding (in shares) | 49,916 | 240,715 | |||||
Price per share (usd per share) | $ 13.99 | ||||||
Stock options vesting period | 3 years | ||||||
Restricted Stock | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Equity instruments other than options, outstanding (in shares) | 662,225 | ||||||
Equity instruments other than options, granted, fair value (usd per share) | $ 14 | ||||||
Restricted Stock Units (RSUs) | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Equity instruments other than options, outstanding (in shares) | 1,378,436 | 344,034 | |||||
Total stock-based compensation expense | $ 5,400 | ||||||
Equity instruments other than options, granted, fair value (usd per share) | $ 10.90 | ||||||
Restricted Stock Units (RSUs) | Director | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Equity instruments other than options, outstanding (in shares) | 66,965 | 8,934 | |||||
Equity instruments other than options, granted, fair value (usd per share) | $ 13.99 | ||||||
Non-Option Equity Instruments | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Compensation cost not yet recognized | $ 22,000 | $ 22,000 | |||||
Weighted-average remaining requisite period | 3 years 5 months 27 days | ||||||
2016 Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Options outstanding, weighted-average contractual life (years) | 10 years | ||||||
2016 Plan | Employee Stock Option | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Options outstanding, weighted-average contractual life (years) | 5 years | ||||||
2016 Plan | Common Stock, Class A | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Percentage of fair market value of Class A common stock | 100.00% | ||||||
2016 Plan | Common Stock, Class A | Stock Compensation Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares reserved for future issuance (in shares) | 8,500,000 | ||||||
2016 Plan | Common Stock, Class A | Employee Stock Option | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Percentage of fair market value of Class A common stock | 110.00% | ||||||
Stockholder, percent ownership | 10.00% | ||||||
2013 Plan | Employee Stock Option | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Price per share (usd per share) | $ 13.75 | ||||||
Total stock-based compensation expense | $ 500 | $ 800 | $ 800 | ||||
Exercises in period (in shares) | 78,544 | ||||||
Exercises in period, intrinsic value | $ 1,200 | ||||||
2013 Plan | Employee Stock Option, Time Based | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Unvested time-based awards forfeited (in shares) | 165,820 | ||||||
2013 Plan | Employee Stock Option, Performance Based | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Options outstanding (in shares) | 432,001 | 432,001 |
Stock-Based Compensation Stock
Stock-Based Compensation Stock Option Assumptions (Details) - Employee Stock Option | 12 Months Ended |
Feb. 03, 2017$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected life | 6 years 3 months 20 days |
Risk-free interest rate | 1.68% |
Volatility | 44.74% |
Dividend yield | 0.00% |
Expected forfeiture rate | 6.12% |
Weighted-average grant-date fair value (usd per share) | $ 6.15 |
Stock-Based Compensation Stoc46
Stock-Based Compensation Stock Option Activity (Details) - Employee Stock Option - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended |
Feb. 03, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Number of options outstanding, beginning (in shares) | 0 |
Granted (in shares) | 2,960,419 |
Exercised (in shares) | 0 |
Canceled, expired or forfeited (in shares) | (382,252) |
Number of options outstanding, ending (in shares) | 2,578,167 |
Number of options expected to vest (in shares) | 2,414,550 |
Number of options exercisable (in shares) | 0 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | |
Weighted-average exercise price, beginning (usd per share) | $ 0 |
Granted (usd per share) | 14 |
Exercised (usd per share) | 0 |
Canceled, expired or forfeited (usd per share) | 14 |
Weighted-average exercise price, ending (usd per share) | 14 |
Weighted-average exercise price, options expected to vest (usd per share) | 14 |
Options exercisable, weighted-average exercise price (usd per share) | $ 0 |
Options granted, weighted average contractual life (years) | 8 years 9 months 7 days |
Options outstanding, weighted-average contractual life (years) | 9 years 2 months 21 days |
Options expected to vest, weighted-average exercise price (years) | 9 years 2 months 21 days |
Options granted, weighted average grant date fair value (usd per share) | $ 6.15 |
Options canceled, expired or forfeited, weighted average grant date fair value (usd per share) | 6.34 |
Options outstanding, weighted average grant date fair value (usd per share) | 6.12 |
Options expected to vest, weighted average grant date fair value (usd per share) | 6.11 |
Options exercisable, weighted average grant date fair value (usd per share) | $ 0 |
Options outstanding, aggregate intrinsic value | $ 0 |
Options expected to vest, aggregate intrinsic value | 0 |
Options exercisable, aggregate intrinsic value | $ 0 |
Stock-Based Compensation Restri
Stock-Based Compensation Restricted Stock Awards (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended |
Feb. 03, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Number of shares outstanding and unvested, beginning (in shares) | 0 |
Granted (in shares) | 2,460,594 |
Vested (in shares) | (2,143) |
Forfeited (in shares) | (215,965) |
Converted (in shares) | 0 |
Number of shares outstanding and unvested, ending (in shares) | 2,242,486 |
Number of shares expected to vest (in shares) | 2,050,166 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Weighted-average exercise price, beginning (usd per share) | $ 0 |
Granted (usd per share) | 13.28 |
Vested (usd per share) | 14 |
Forfeited (usd per share) | 14 |
Converted (usd per share) | 0 |
Weighted-average exercise price, ending (usd per share) | 13.21 |
Number of shares expected to vest (in shares) | $ 13.22 |
Equity instruments other than options, granted, weighted-average contractual life (years) | 1 year 8 months 16 days |
Equity instruments other than options, outstanding, weighted-average contractual life (years) | 1 year 10 months 18 days |
Equity instruments other than options, expected to vest, weighted-average contractual life (years) | 2 years 19 days |
Equity instruments other than options, granted, aggregate intrinsic value | $ 26,058 |
Equity instruments other than options, outstanding, aggregate intrinsic value | 23,748 |
Equity instruments other than options, expected to vest, aggregate intrinsic value | $ 21,711 |
Stock-Based Compensation Stock-
Stock-Based Compensation Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2017 | Jan. 29, 2016 | Jan. 30, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total stock-based compensation expense | $ 8,883 | $ 841 | $ 785 |
Cost of revenue | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total stock-based compensation expense | 462 | 0 | 0 |
Research and development | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total stock-based compensation expense | 2,033 | 277 | 259 |
Sales and marketing | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total stock-based compensation expense | 1,068 | 0 | 0 |
General and administrative | |||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | |||
Total stock-based compensation expense | $ 5,320 | $ 564 | $ 526 |
Income and Other Taxes - Effect
Income and Other Taxes - Effective Tax Rate (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2017 | Jan. 29, 2016 | Jan. 30, 2015 | |
Income Tax Disclosure [Abstract] | |||
Loss before income taxes | $ (63,477) | $ (112,577) | $ (61,235) |
Income tax benefit | $ (25,264) | $ (40,196) | $ (22,745) |
U.S. federal statutory rate | 35.00% | 35.00% | 35.00% |
Foreign income taxed at different rates | (0.30%) | (0.90%) | (0.70%) |
State income taxes, net of federal tax benefit | 3.20% | 1.90% | 2.80% |
Research and development credits | 3.10% | 0.50% | 0.00% |
Nondeductible/nontaxable items | (1.20%) | (0.80%) | (0.00%) |
Total | 39.80% | 35.70% | 37.10% |
Income and Other Taxes - Benefi
Income and Other Taxes - Benefit for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2017 | Jan. 29, 2016 | Jan. 30, 2015 | |
Current: | |||
Federal | $ (22,470) | $ (12,519) | $ (7,552) |
State/Local | 657 | (1,517) | (585) |
Foreign | 1,379 | (1,366) | (383) |
Current | (20,434) | (15,402) | (8,520) |
Deferred: | |||
Federal | (3,620) | (24,472) | (12,970) |
State/Local | (471) | 330 | (1,172) |
Foreign | (739) | (652) | (83) |
Deferred | (4,830) | (24,794) | (14,225) |
Income tax benefit | $ (25,264) | $ (40,196) | $ (22,745) |
Income and Other Taxes - Loss B
Income and Other Taxes - Loss Before Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2017 | Jan. 29, 2016 | Jan. 30, 2015 | |
Income Tax Disclosure [Abstract] | |||
Domestic | $ (64,542) | $ (103,061) | $ (58,641) |
Foreign | 1,065 | (9,516) | (2,594) |
Loss before income taxes | $ (63,477) | $ (112,577) | $ (61,235) |
Income and Other Taxes - Deferr
Income and Other Taxes - Deferred Taxes (Details) - USD ($) $ in Thousands | Feb. 03, 2017 | Jan. 29, 2016 |
Deferred tax assets: | ||
Deferred revenue | $ 6,232 | $ 5,231 |
Provision for doubtful accounts | 2,377 | 874 |
Credit carryforwards | 0 | 480 |
Loss carryforwards | 2,806 | 18,509 |
Stock-based and deferred compensation | 9,568 | 6,443 |
Deferred tax assets | 20,983 | 31,537 |
Valuation allowance | (2,806) | (2,438) |
Deferred tax assets, net of valuation allowance | 18,177 | 29,099 |
Deferred tax liabilities: | ||
Property and equipment | (1,367) | (192) |
Purchased intangible assets | (97,836) | (107,901) |
Operating and compensation related accruals | (3,933) | (7,855) |
Other | (29) | (732) |
Deferred tax liabilities | (103,165) | (116,680) |
Net deferred tax liabilities | $ (84,988) | $ (87,581) |
Income and Other Taxes Narrativ
Income and Other Taxes Narrative (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 03, 2017 | Oct. 28, 2016 | Jul. 29, 2016 | Apr. 29, 2016 | Jan. 29, 2016 | Oct. 30, 2015 | Jul. 31, 2015 | May 01, 2015 | Feb. 03, 2017 | Jan. 29, 2016 | Jan. 30, 2015 | |
Operating Loss Carryforwards [Line Items] | |||||||||||
Deferred tax assets related to operating loss carryforwards | $ 2,806,000 | $ 18,509,000 | $ 2,806,000 | $ 18,509,000 | |||||||
Pre-tax loss | (63,477,000) | (112,577,000) | $ (61,235,000) | ||||||||
Income tax benefit | (25,264,000) | (40,196,000) | (22,745,000) | ||||||||
Net loss | 6,817,000 | $ 7,718,000 | $ 12,051,000 | $ 11,627,000 | 14,899,000 | $ 18,528,000 | $ 21,124,000 | $ 17,830,000 | 38,213,000 | 72,381,000 | $ 38,490,000 |
Unrecognized tax benefits | 600,000 | 0 | 600,000 | 0 | |||||||
Pro Forma | |||||||||||
Operating Loss Carryforwards [Line Items] | |||||||||||
Pre-tax loss | (63,500,000) | ||||||||||
Income tax benefit | (12,100,000) | ||||||||||
Net loss | 51,400,000 | ||||||||||
State and Local Jurisdiction | |||||||||||
Operating Loss Carryforwards [Line Items] | |||||||||||
Deferred tax assets related to operating loss carryforwards | $ 2,800,000 | $ 2,400,000 | $ 2,800,000 | $ 2,400,000 |
Selected Financial Informatio54
Selected Financial Information (Details) - USD ($) $ in Thousands | Feb. 03, 2017 | Jan. 29, 2016 |
Accounts receivable, net: | ||
Gross accounts receivable | $ 119,678 | $ 120,841 |
Allowance for doubtful accounts | (6,132) | (4,484) |
Total | 113,546 | 116,357 |
Other current assets: | ||
Income tax receivable | 25,091 | 0 |
Prepaid maintenance and support agreements | 16,107 | 17,736 |
Prepaid other | 10,749 | 8,475 |
Total | 51,947 | 26,211 |
Property and equipment, net | ||
Property, Plant and Equipment, Gross | 65,751 | 45,437 |
Accumulated depreciation | (34,598) | (22,671) |
Total | 31,153 | 22,766 |
Other noncurrent assets | ||
Prepaid maintenance agreements | 2,304 | 1,700 |
Deferred tax asset | 1,503 | 709 |
Deferred IPO costs | 0 | 4,329 |
Other | 1,897 | 2,598 |
Total | 5,704 | 9,336 |
Accrued and other current liabilities | ||
Compensation | 36,803 | 29,439 |
Intercompany payable, net | 9,052 | 21,691 |
Other | 13,849 | 9,277 |
Total | 59,704 | 60,407 |
Other non-current liabilities | ||
Deferred tax liabilities | 86,491 | 88,290 |
Intercompany payable, net | 1,100 | 0 |
Other | 1,801 | 2,694 |
Total | 89,392 | 90,984 |
Computer equipment | ||
Property and equipment, net | ||
Property, Plant and Equipment, Gross | 47,407 | 29,001 |
Leasehold improvements | ||
Property and equipment, net | ||
Property, Plant and Equipment, Gross | 16,986 | 15,470 |
Other equipment | ||
Property and equipment, net | ||
Property, Plant and Equipment, Gross | $ 1,358 | $ 966 |
Selected Financial Informatio55
Selected Financial Information Additional (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 03, 2017 | Oct. 28, 2016 | Jul. 29, 2016 | Apr. 29, 2016 | Jan. 29, 2016 | Oct. 30, 2015 | Jul. 31, 2015 | May 01, 2015 | Feb. 03, 2017 | Jan. 29, 2016 | Jan. 30, 2015 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net revenue | $ 118,948 | $ 107,108 | $ 103,653 | $ 99,793 | $ 94,081 | $ 88,187 | $ 79,855 | $ 77,399 | $ 429,502 | $ 339,522 | $ 262,130 |
Property and equipment, net | 31,153 | 22,766 | 31,153 | 22,766 | |||||||
United States | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net revenue | 374,254 | 298,984 | 230,309 | ||||||||
Property and equipment, net | 26,916 | 20,453 | 26,916 | 20,453 | |||||||
Foreign Countries | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net revenue | 55,248 | 40,538 | $ 31,821 | ||||||||
Property and equipment, net | $ 4,237 | $ 2,313 | $ 4,237 | $ 2,313 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||||
Feb. 03, 2017 | Oct. 28, 2016 | Jul. 29, 2016 | Apr. 29, 2016 | Jan. 29, 2016 | Oct. 30, 2015 | Jul. 31, 2015 | May 01, 2015 | Jan. 29, 2016 | Feb. 03, 2017 | Jan. 29, 2016 | Jan. 30, 2015 | Sep. 07, 2016 | |
Related Party Transaction [Line Items] | |||||||||||||
Purchases of systems from Dell | $ 212,599 | $ 183,809 | $ 144,846 | ||||||||||
Purchases of computer equipment from Dell | 19,361 | 9,023 | 9,542 | ||||||||||
Purchase of annual maintenance services | $ 16,107 | $ 17,736 | $ 17,736 | 16,107 | 17,736 | ||||||||
Revenues | 118,948 | $ 107,108 | $ 103,653 | $ 99,793 | 94,081 | $ 88,187 | $ 79,855 | $ 77,399 | 429,502 | 339,522 | 262,130 | ||
Chief Executive Officer | |||||||||||||
Related Party Transaction [Line Items] | |||||||||||||
Revenue from related parties | 100 | 300 | 300 | ||||||||||
Dell Inc. | Principal Owner | |||||||||||||
Related Party Transaction [Line Items] | |||||||||||||
Fees for professional services | 4,400 | $ 7,200 | |||||||||||
Purchases of systems from Dell | 3,000 | 11,600 | 7,800 | ||||||||||
Purchases of computer equipment from Dell | 3,600 | $ 3,700 | 3,100 | ||||||||||
Dell Inc. | Principal Owner | Related Party Allocations | |||||||||||||
Related Party Transaction [Line Items] | |||||||||||||
Fees for professional services | 5,500 | ||||||||||||
Dell Inc. | Principal Owner | Shared Service Agreement Charges | |||||||||||||
Related Party Transaction [Line Items] | |||||||||||||
Fees for professional services | 3,000 | ||||||||||||
Dell Inc. | Principal Owner | Professional Service Fees | |||||||||||||
Related Party Transaction [Line Items] | |||||||||||||
Fees for professional services | 2,200 | ||||||||||||
Dell Inc. | Principal Owner | Contracts Not Yet Transferred | |||||||||||||
Related Party Transaction [Line Items] | |||||||||||||
Revenues | $ 16,700 | 39,000 | |||||||||||
Dell Inc. | Principal Owner | Solutions Purchases | |||||||||||||
Related Party Transaction [Line Items] | |||||||||||||
Revenues | 22,000 | $ 7,500 | |||||||||||
EMC and VMware | Subsidiary of Common Parent | |||||||||||||
Related Party Transaction [Line Items] | |||||||||||||
Purchase of annual maintenance services | $ 3,000 | $ 3,000 | $ 4,400 |
Related Party Transactions Rela
Related Party Transactions Related Party Transactions Rollforward (Details) - USD ($) $ in Thousands | Feb. 03, 2017 | Jan. 29, 2016 |
Related Party Transaction [Line Items] | ||
Intercompany receivable | $ 1,680 | $ 19,496 |
Intercompany payable | (11,832) | (41,187) |
Net intercompany payable (in accrued and other) | (10,152) | (21,691) |
Other non-current assets | 5,704 | 9,336 |
Other non-current liabilities | 89,392 | 90,984 |
Dell Inc. | Principal Owner | ||
Related Party Transaction [Line Items] | ||
Accounts receivable from clients under reseller agreements with Dell (in accounts receivable, net) | 16,658 | 15,552 |
Other non-current assets | $ 25,091 | |
Other non-current liabilities | $ 18,509 |
Unaudited Quarterly Results o58
Unaudited Quarterly Results of Operations (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 03, 2017 | Oct. 28, 2016 | Jul. 29, 2016 | Apr. 29, 2016 | Jan. 29, 2016 | Oct. 30, 2015 | Jul. 31, 2015 | May 01, 2015 | Feb. 03, 2017 | Jan. 29, 2016 | Jan. 30, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Net revenue | $ 118,948 | $ 107,108 | $ 103,653 | $ 99,793 | $ 94,081 | $ 88,187 | $ 79,855 | $ 77,399 | $ 429,502 | $ 339,522 | $ 262,130 |
Gross margin | 62,742 | 53,471 | 50,746 | 49,944 | 44,450 | 42,722 | 35,138 | 33,403 | 216,903 | 155,713 | 117,284 |
Net loss | $ (6,817) | $ (7,718) | $ (12,051) | $ (11,627) | $ (14,899) | $ (18,528) | $ (21,124) | $ (17,830) | $ (38,213) | $ (72,381) | $ (38,490) |
Net loss per common share, basic and diluted (usd per share) | $ (0.09) | $ (0.10) | $ (0.15) | $ (0.17) | $ (0.21) | $ (0.26) | $ (0.30) | $ (0.25) | $ (0.49) | $ (1.03) | $ (0.55) |
Weighted average common shares outstanding, basic and diluted (in shares) | 80,009 | 80,009 | 80,009 | 70,330 | 70,000 | 70,000 | 70,000 | 70,000 | 77,635 | 70,000 | 70,000 |
Unaudited Quarterly Results o59
Unaudited Quarterly Results of Operations Reclassifications (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Oct. 28, 2016 | Jul. 29, 2016 | Apr. 29, 2016 | Jan. 29, 2016 | Oct. 30, 2015 | Jul. 31, 2015 | May 01, 2015 | Feb. 03, 2017 | Jan. 29, 2016 | Jan. 30, 2015 | |
Effect of Fourth Quarter Events [Line Items] | ||||||||||
Research and development | $ 16,963 | $ 17,373 | $ 17,597 | $ 18,097 | $ 16,987 | $ 17,584 | $ 16,930 | $ 71,030 | $ 69,598 | $ 45,092 |
Sales and marketing | 29,725 | 31,820 | 30,262 | 28,957 | 29,635 | 29,210 | 24,176 | 124,950 | 111,978 | 85,046 |
General and administrative | 21,626 | 21,600 | 21,085 | 19,880 | 20,945 | 20,693 | 18,627 | 86,876 | 80,145 | 48,239 |
Total operating expenses | 68,314 | 70,793 | 68,944 | 66,934 | 67,567 | 67,487 | 59,733 | $ 282,856 | 261,721 | 178,377 |
As stated | ||||||||||
Effect of Fourth Quarter Events [Line Items] | ||||||||||
Research and development | 12,181 | 12,848 | 13,596 | 13,045 | 12,230 | 12,643 | 11,830 | 49,747 | 32,053 | |
Sales and marketing | 26,424 | 28,639 | 27,496 | 0 | 27,109 | 26,696 | 22,119 | 0 | 0 | |
General and administrative | 29,709 | 29,306 | 27,852 | 53,889 | 28,228 | 28,148 | 25,784 | 0 | 0 | |
Total operating expenses | 68,314 | 70,793 | 68,944 | 66,934 | 67,567 | 67,487 | 59,733 | 261,721 | 178,377 | |
Reclassification | ||||||||||
Effect of Fourth Quarter Events [Line Items] | ||||||||||
Research and development | 4,782 | 4,525 | 4,001 | 5,052 | 4,757 | 4,941 | 5,100 | 19,851 | 13,039 | |
Sales and marketing | 3,301 | 3,181 | 2,766 | 28,957 | 2,526 | 2,514 | 2,057 | 111,978 | 85,046 | |
General and administrative | (8,083) | (7,706) | (6,767) | (34,009) | (7,283) | (7,455) | (7,157) | 80,145 | 48,239 | |
Total operating expenses | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |
Subsequent Event (Details)
Subsequent Event (Details) - Revolving Credit Facility - Line of Credit - USD ($) | Mar. 28, 2017 | Nov. 02, 2015 |
Subsequent Event [Line Items] | ||
Maximum borrowing capacity | $ 30,000,000 | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Extension of term | 1 year | |
Maximum borrowing capacity | $ 30,000,000 |
Valuation and Qualifying Acco61
Valuation and Qualifying Accounts (Details) - Allowance for Doubtful Accounts [Member] - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2017 | Jan. 29, 2016 | Jan. 30, 2015 | |
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at beginning of period | $ 4,484 | $ 1,059 | $ 539 |
Charged to income statement | 2,613 | 4,661 | 768 |
Charged to allowance | (965) | (1,236) | (248) |
Balance at end of period | $ 6,132 | $ 4,484 | $ 1,059 |