SecureWorks (SCWX) 10-Q 6 Sep 17 2018 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Aug. 04, 2017	Aug. 25, 2017
Document Information [Line Items]
Entity Registrant Name	SECUREWORKS CORP.
Entity Central Index Key	1,468,666
Current Fiscal Year End Date	--02-02
Entity Filer Category	Non-accelerated Filer
Document Type	10-Q
Document Period End Date	Aug. 4, 2017
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q2
Amendment Flag	false
Common Stock, Class A
Document Information [Line Items]
Entity Common Stock, Shares Outstanding (in shares)		11,074,752
Common Stock, Class B
Document Information [Line Items]
Entity Common Stock, Shares Outstanding (in shares)		70,000,000

Condensed Consolidated Statemen

Condensed Consolidated Statements of Financial Position (Unaudited) - USD ($) $ in Thousands	Aug. 04, 2017	Feb. 03, 2017
Current assets:
Cash and cash equivalents	$ 97,780	$ 116,595
Accounts receivable, net of allowances of $7,964 and $6,132, respectively	122,664	113,546
Inventories, net	1,170	1,947
Other current assets	51,004	51,947
Total current assets	272,618	284,035
Property and equipment, net	32,779	31,153
Goodwill	416,487	416,487
Purchased intangible assets, net	248,053	261,921
Other non-current assets	6,091	5,704
Total assets	976,028	999,300
Current liabilities:
Accounts payable	23,847	24,119
Accrued and other	56,287	59,704
Short-term deferred revenue	133,811	119,909
Total current liabilities	213,945	203,732
Long-term deferred revenue	14,644	14,752
Other non-current liabilities	74,993	89,392
Total liabilities	303,582	307,876
Commitments and Contingencies (Note 5)
Stockholders' equity:
Preferred stock - $0.01 par value: 200,000 shares authorized; 0 shares issued	0	0
Additional paid in capital	860,824	854,907
Accumulated deficit	(187,213)	(160,859)
Accumulated other comprehensive loss	(1,976)	(3,431)
Total stockholders' equity	672,446	691,424
Total liabilities and stockholders' equity	976,028	999,300
Common Stock, Class A
Stockholders' equity:
Common stock, Class A and Class B, $.01 par value	111	107
Common Stock, Class B
Stockholders' equity:
Common stock, Class A and Class B, $.01 par value	$ 700	$ 700

Condensed Consolidated Stateme3

Condensed Consolidated Statements of Financial Position (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Aug. 04, 2017	Feb. 03, 2017
Accounts receivable, allowance for doubtful accounts	$ 7,964	$ 6,132
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)	11,075,000	10,566,000
Common stock, shares outstanding (in shares)	11,075,000	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

Condensed Consolidated Stateme4

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 04, 2017	Jul. 29, 2016	Aug. 04, 2017	Jul. 29, 2016
Income Statement [Abstract]
Net revenue	$ 116,123	$ 103,653	$ 229,716	$ 203,446
Cost of revenue	56,325	52,907	110,267	102,756
Gross margin	59,798	50,746	119,449	100,690
Research and development	19,693	17,373	39,172	34,970
Sales and marketing	37,620	31,820	74,789	62,082
General and administrative	21,138	21,600	44,542	42,685
Total operating expenses	78,451	70,793	158,503	139,737
Operating loss	(18,653)	(20,047)	(39,054)	(39,047)
Interest and other, net	(425)	851	(1,074)	1,216
Loss before income taxes	(19,078)	(19,196)	(40,128)	(37,831)
Income tax benefit	(6,960)	(7,145)	(13,774)	(14,153)
Net loss	$ (12,118)	$ (12,051)	$ (26,354)	$ (23,678)
Net loss per common share, basic and diluted (usd per share)	$ (0.15)	$ (0.15)	$ (0.33)	$ (0.31)
Weighted average common shares outstanding, basic and diluted (in shares)	80,353	80,009	80,205	75,169

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 04, 2017	Jul. 29, 2016	Aug. 04, 2017	Jul. 29, 2016
Statement of Comprehensive Income [Abstract]
Net loss	$ (12,118)	$ (12,051)	$ (26,354)	$ (23,678)
Foreign currency translation adjustments, net of zero tax	762	(1,753)	1,455	(1,259)
Comprehensive loss	$ (11,356)	$ (13,804)	$ (24,899)	$ (24,937)

Condensed Consolidated Stateme6

Condensed Consolidated Statements of Comprehensive Loss (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 04, 2017	Jul. 29, 2016	Aug. 04, 2017	Jul. 29, 2016
Statement of Comprehensive Income [Abstract]
Foreign currency translation adjustments, tax	$ 0	$ 0	$ 0	$ 0

Condensed Consolidated Stateme7

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Aug. 04, 2017	Jul. 29, 2016
Cash flows from operating activities:
Net loss	$ (26,354)	$ (23,678)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	20,666	19,422
Change in fair value of convertible notes	0	132
Stock-based compensation expense	7,158	3,365
Effects of exchange rate changes on monetary assets and liabilities denominated in foreign currencies	1,456	(1,129)
Income tax benefit	(15,098)	(14,153)
Provision for doubtful accounts	2,591	1,340
Excess tax benefit from share-based payment	0	(221)
Changes in assets and liabilities:
Accounts receivable	(12,491)	15,388
Due to / from parent	7,653	(21,032)
Inventories	778	25
Other assets	606	109
Accounts payable	(269)	4,720
Deferred revenue	13,819	2,651
Accrued and other liabilities	(8,930)	(8,519)
Net cash used in operating activities	(8,415)	(21,580)
Cash flows from investing activities:
Capital expenditures	(8,376)	(7,930)
Net cash used in investing activities	(8,376)	(7,930)
Cash flows from financing activities:
Proceeds from initial public offering, net	0	99,604
Excess tax benefit from share-based payment	0	221
Capital contribution from parent, net	0	9,547
Principal payments on financing arrangement with Dell Financial Services	(800)	0
Taxes paid on vested restricted shares	(1,224)	0
Net cash (used in) provided by financing activities	(2,024)	109,372
Net (decrease) increase in cash and cash equivalents	(18,815)	79,862
Cash and cash equivalents at beginning of the period	116,595	33,422
Cash and cash equivalents at end of the period	$ 97,780	$ 113,284

Condensed Consolidated Stateme8

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - 6 months ended Aug. 04, 2017 - 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 Feb. 03, 2017		10,566	70,000
Balances, February 3, 2017 at Feb. 03, 2017	$ 691,424	$ 107	$ 700	$ 854,907	$ (160,859)	$ (3,431)
Statement of Shareholders' Equity
Net loss	(26,354)				(26,354)
Other comprehensive loss	1,455					1,455
Vesting of restricted stock units (in shares)		372
Vesting of restricted stock units	0	$ 4		(4)
Grant of restricted stock awards (in shares)		284
Grant of restricted stock awards	0	$ 2		(2)
Common stock withheld as payment for withholding taxes upon the vesting of restricted shares (in shares)		(147)
Common stock withheld as payment for withholding taxes upon the vesting of restricted shares	(1,237)	$ (2)		(1,235)
Stock-based compensation	7,158			7,158
Ending balance (in shares) at Aug. 04, 2017		11,075	70,000
Balances, August 4, 2017 at Aug. 04, 2017	$ 672,446	$ 111	$ 700	$ 860,824	$ (187,213)	$ (1,976)

Description of the Business and

Description of the Business and Basis of Presentation	6 Months Ended
	Aug. 04, 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. 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 outstanding shares of the Company's outstanding Class B common stock, which as of August 4, 2017 represented approximately 86.3% of the Company's total outstanding shares of common stock and approximately 98.4% 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. 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. 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 4—Debt." Basis of Presentation and Consolidation The Company's condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). 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 condensed consolidated financial statements include assets, liabilities, revenue and expenses of all majority-owned subsidiaries. Intercompany transactions and balances are eliminated in consolidation. 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. The costs of these services are charged in accordance with a shared services agreement that went into effect on August 1, 2015. For more information regarding the allocated costs and related party transactions, see " Note 8 —Related Party Transactions." During the periods presented in the financial statements, SecureWorks did not file separate federal tax returns, as the Company is 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 7 —Income and Other Taxes" for more information. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and the requirements of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statement presentation. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. In the opinion of management, all adjustments consisting of normal recurring accruals and disclosures considered necessary for a fair statement have been included. All inter-company accounts and transactions have been eliminated in consolidation. The accompanying condensed consolidated financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto for the year ended February 3, 2017 included in Part II, Item 8 of the Company's Annual Report on Form 10-K filed with the SEC on March 29, 2017 (the "Annual Report"). 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 2, 2018 and February 3, 2017 as fiscal 2018 and fiscal 2017, respectively. Fiscal 2018 has 52 weeks, and each quarter has 13 weeks. Fiscal 2017 had 53 weeks, and each quarter had 13 weeks except the fourth quarter, which had 14 weeks. Reclassification 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 such changes 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 peer companies. The reclassifications are 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 Condensed Consolidated Statements of Operations for the three and six months ended July 29, 2016 : Three Months Ended July 29, 2016 As Reported Reclassification As Reclassified Statement of Operations Data: Research and development $ 12,848 $ 4,525 $ 17,373 Sales and marketing 28,639 3,181 31,820 General and administrative 29,306 (7,706 ) 21,600 Total operating expenses $ 70,793 $ — $ 70,793 Six Months Ended July 29, 2016 As Reported Reclassification As Reclassified Statement of Operations Data: Research and development $ 26,444 $ 8,526 $ 34,970 Sales and marketing 56,135 5,947 62,082 General and administrative 57,158 (14,473 ) 42,685 Total operating expenses $ 139,737 $ — $ 139,737 Additional information concerning the effect of these reclassifications on the previously issued quarterly condensed consolidated financial statements is provided in Part II, Item 8, Note 11 to Consolidated Financial Statements included in the Annual Report. 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 Condensed Consolidated Statements of Operations, estimates are used when accounting for revenue arrangements, determining the cost of revenue, allocating costs and estimating the impact of contingencies. In the Condensed Consolidated 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 Condensed Consolidated Statements of Operations. Actual results could differ from these estimates. Recently Adopted Accounting Pronouncements Compensation - Stock Compensation —In March 2016, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("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 Company adopted this guidance during the three months ended May 5, 2017 with no material impact on its condensed consolidated financial statements. Recently Issued Accounting Pronouncements Compensation - Stock Compensation —In May 2017, the FASB issued ASU No. 2017-09, "Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting." The amendments in this update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting under Topic 718. The amendments are effective for the Company beginning with the Company's 2019 fiscal year, although early adoption is permitted. The Company does not expect these amendments to have a material impact on its consolidated financial statements. Intangibles - Goodwill and Other —In January 2017, the FASB issued ASU No. 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 for annual and interim periods beginning in the Company's 2021 fiscal year, with early adoption permitted, and will be applied on a prospective basis. The Company does not expect that the adoption of this standard will have a material impact 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. 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. Companies are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. 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. The Company continues to evaluate the impact of this guidance on its consolidated financial statements and related disclosures, but 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. 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. 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. The new standard also provides guidance on the accounting for costs to fulfill or obtain a customer contract. Further, the new standard requires additional disclosures to help enable users of the financial statements to better understand the nature, amount, timing, risks and judgments related to revenue recognition and related cash flows from contracts with customers. 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 expects to adopt this standard and its amendments retrospectively to each period presented for the Company's 2019 fiscal year, including interim periods. The Company expects the adoption of the new standard to impact the accounting for costs to fulfill or obtain a customer contract. The impact may affect both the types of costs deferred and the amortization period of deferred costs. The Company continues to evaluate whether the guidance will have additional impacts on its consolidated financial statements and will also monitor for additional impacts due to any changes to the standard or interpretations that become available.

Net Loss Per Share

Net Loss Per Share	6 Months Ended
	Aug. 04, 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 the Class A common stock and the Class B common stock 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): Three Months Ended Six Months Ended August 4, 2017 July 29, 2016 August 4, 2017 July 29, 2016 Numerator: Net loss $ (12,118 ) $ (12,051 ) $ (26,354 ) $ (23,678 ) Denominator: Weighted-average number of shares outstanding: Basic and Diluted 80,353 80,009 80,205 75,169 Loss per common share: Basic and Diluted $ (0.15 ) $ (0.15 ) $ (0.33 ) $ (0.31 ) Weighted-average anti-dilutive stock options, non-vested restricted stock and restricted stock units 3,931 4,925 3,928 2,699

Goodwill and Intangible Assets

Goodwill and Intangible Assets	6 Months Ended
	Aug. 04, 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 August 4, 2017 and February 3, 2017 . Goodwill and indefinite-lived intangible assets are tested for impairment on an annual basis during the third fiscal quarter, or earlier if an indicator of impairment occurs. The Company completed its most recent annual impairment test by performing a qualitative assessment of goodwill at the 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 the 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, that the first and second steps of the quantitative goodwill impairment test were unnecessary. Further, no triggering events have subsequently transpired that would indicate a potential impairment as of August 4, 2017 . Intangible Assets The Company's intangible assets as of August 4, 2017 and February 3, 2017 were as follows: August 4, 2017 February 3, 2017 Gross Accumulated Amortization Net Gross Accumulated Amortization Net (in thousands) Customer relationships $ 189,518 $ (56,010 ) $ 133,508 $ 189,518 $ (48,963 ) $ 140,555 Technology 135,584 (51,157 ) 84,427 135,584 (44,336 ) 91,248 Finite-lived intangible assets 325,102 (107,167 ) 217,935 325,102 (93,299 ) 231,803 Trade name 30,118 — 30,118 30,118 — 30,118 Total intangible assets $ 355,220 $ (107,167 ) $ 248,053 $ 355,220 $ (93,299 ) $ 261,921 Amortization expense related to finite-lived intangible assets was approximately $6.9 million and $13.9 million for each of the three and six months ended August 4, 2017 and July 29, 2016 , respectively. Amortization expense is included within cost of revenue and general and administrative in the Condensed Consolidated Statements of Operations. There were no impairment charges related to intangible assets during the three and six months ended August 4, 2017 .

Debt

Debt	6 Months Ended
	Aug. 04, 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. 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 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 change in fair value was included in interest and other, net in the Condensed Consolidated Statements of Operations. 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 beginning on April 21, 2016. During the three months ended May 5, 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 August 4, 2017 or 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.

Commitments and Contingencies

Commitments and Contingencies	6 Months Ended
	Aug. 04, 2017
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	COMMITMENTS AND CONTINGENCIES 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 such matters 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 August 4, 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. Client-based Taxation Contingencie s — Various government entities ("taxing authorities") require us to bill our clients for the taxes they owe based on the services they purchase from us. The application of the rules of each taxing authority concerning which services are subject to each tax and how those services should be taxed involves the application of judgment. Taxing authorities periodically perform audits to verify compliance and include all periods that remain open under applicable statutes, which generally range from three to four years. These audits could result in significant assessments of past taxes, fines and interest if we were found to be non-compliant. During the course of an audit, a taxing authority may question our application of its rules in a manner that, if we were not successful in substantiating our position, could result in a significant financial impact to us. In the course of preparing our financial statements and disclosures, we consider whether information exists that would warrant disclosure or an accrual with respect to such a contingency. 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 no client that represented 10% or more of its net revenue for the three and six months ended August 4, 2017 or July 29, 2016 .

Stock-Based Compensation And Ot

Stock-Based Compensation And Other Long-Term Performance Incentives	6 Months Ended
	Aug. 04, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock-Based Compensation And Other Long-Term Performance Incentives	STOCK-BASED COMPENSATION AND OTHER LONG-TERM PERFORMANCE INCENTIVES The Company's board of directors adopted the SecureWorks Corp. 2016 Long-Term Incentive Plan (the "2016 Plan") effective April 18, 2016. 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. In March 2017, the Company began granting long-term performance cash awards to certain employees. The employees who receive these performance cash awards do not receive equity awards as part of the long-term incentive program. The long-term performance cash awards are subject to various performance conditions and vest in equal annual installments over a three -year period. During the three and six months ended August 4, 2017 , the Company granted approximately $0.8 million and $11.6 million of these awards, respectively. The Company recognized $0.6 million and $1.1 million of related compensation expense for the three and six months ended August 4, 2017 , respectively. For the three and six months ended August 4, 2017 , the Company issued 132,574 and 753,738 restricted stock units, respectively, under the 2016 Plan. The Company issued no restricted stock awards during the three months ended August 4, 2017 and issued 283,988 restricted stock awards during the six months ended August 4, 2017 under the 2016 Plan. The restricted stock unit and restricted stock awards vest over a three -year period and approximately 50% of such awards are subject to performance conditions.

Income and Other Taxes

Income and Other Taxes	6 Months Ended
	Aug. 04, 2017
Income Tax Disclosure [Abstract]
Income and Other Taxes	INCOME AND OTHER TAXES The Company's effective income tax rate for the three and six months ended August 4, 2017 and July 29, 2016 was as follows: Three Months Ended Six Months Ended August 4, 2017 July 29, 2016 August 4, 2017 July 29, 2016 Loss before income taxes $ (19,078 ) $ (19,196 ) $ (40,128 ) $ (37,831 ) Income tax benefit $ (6,960 ) $ (7,145 ) $ (13,774 ) $ (14,153 ) Effective tax rate 36.5 % 37.2 % 34.3 % 37.4 % The Company's effective tax rate for the six months ended August 4, 2017 includes expense of approximately $0.8 million relating to the impact of the vesting of certain equity awards for which the fair value on the vesting date was lower than the fair value on the date the equity awards were originally granted. This change in fair value, which is measured by the price of the Class A common stock as reported on the NASDAQ Global Select Market, resulted in a lower actual tax deduction than was deducted for financial reporting purposes. For the three months ended August 4, 2017, the Company had no vesting of equity awards and accordingly no related expense. During the periods presented in the accompanying condensed consolidated financial statements, the Company 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 the Company when those attributes are utilized by other members of the Dell consolidated group. Net deferred tax balances are included in other non-current assets and other non-current liabilities in the Condensed Consolidated Statements of Financial Position. As of August 4, 2017 and February 3, 2017 , the Company had $3.2 million and $2.8 million , respectively, of deferred tax assets 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 August 4, 2017 and February 3, 2017 . 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 six months ended August 4, 2017 would have been $40.1 million , $4.9 million and $35.2 million , respectively, as a result of the recognition of a valuation allowance that would be recorded on certain deferred tax assets. The Company had $0.6 million of unrecognized tax benefits as of both August 4, 2017 and February 3, 2017 .

Related Party Transactions

Related Party Transactions	6 Months Ended
	Aug. 04, 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. The costs of services provided to SecureWorks by Dell are governed by a shared services agreement between SecureWorks and Dell Inc. or its wholly-owned subsidiaries. The total amounts of the charges under the shared services agreement with Dell were $1.2 million and $2.5 million for the three and six months ended August 4, 2017 , respectively, and $1.3 million and $2.7 million for the three and six months ended July 29, 2016 , respectively. 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. Related Party Arrangements The Company may purchase certain enterprise hardware systems from Dell Inc. and its wholly-owned subsidiaries in order to provide security solutions to the Company's clients. 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. The Company did not make any direct purchases of systems from Dell for the three and six months ended August 4, 2017 . Purchases of systems from Dell totaled $0.2 million and $3.0 million for the three and six months ended July 29, 2016 , respectively. The Company also purchases computer equipment for internal use from Dell that was capitalized within property and equipment in the Condensed Consolidated Statements of Financial Position. These purchases were made at pricing that is intended to approximate arm's-length pricing. Purchases of computer equipment from Dell totaled $0.8 million and $1.5 million for the three and six months ended August 4, 2017 , respectively, and $1.0 million and $1.5 million for the three and six months ended July 29, 2016 , 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"), 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 $0.2 million and $0.4 million for the three and six months ended August 4, 2017 , respectively. Approximately $3.0 million of the purchases from VMware prior to the six months ended August 4, 2017 were financed through Dell Financial Services, of which approximately $2.2 million of such purchases were included in intercompany liabilities as of August 4, 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, L.P. totaled $23 thousand and $46 thousand for the three and six months ended August 4, 2017 , respectively, and $31 thousand and $54 thousand for the three and six months ended July 29, 2016 , 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 August 1, 2015, upon the creation of new subsidiaries to segregate some of the Company's operations from Dell's operations, 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 and for contracts subsequently originated through Dell under a reseller agreement, the Company recognized revenues of approximately $10.2 million and $20.4 million for the three and six months ended August 4, 2017 , respectively, and $9.3 million and $18.6 million for the three and six months ended July 29, 2016 , respectively. As the Company's client and on behalf of certain of its own clients, Dell also purchases solutions from the Company at pricing that is intended to approximate arm's-length pricing. Such revenues totaled approximately $6.7 million and $12.6 million for the three and six months ended August 4, 2017 , respectively, and $5.0 million and $9.9 million for the three and six months ended July 29, 2016 , respectively. As a result of the foregoing related party arrangements, the Company has recorded the following related party balances in the Condensed Consolidated Statements of Financial Position as of August 4, 2017 and February 3, 2017 . During the third quarter of fiscal 2017, the Company began settling in cash its related party balances with Dell on a quarterly basis. August 4, 2017 February 3, 2017 (in thousands) Intercompany receivable $ — $ 1,680 Intercompany payable (16,368 ) (11,832 ) Net intercompany payable (in accrued and other) $ (16,368 ) $ (10,152 ) Accounts receivable from clients under reseller agreements with Dell (included in accounts receivable, net) $ 17,328 $ 16,658 Net operating loss tax sharing receivable under agreement with Dell (included in "Other current assets" at August 4, 2017 and February 3, 2017) $ 24,654 $ 25,091

Fair Value Measurements

Fair Value Measurements	6 Months Ended
	Aug. 04, 2017
Fair Value Disclosures [Abstract]
Fair Value Measurements	FAIR VALUE MEASUREMENTS The Company measures fair value within the guidance of the three-level valuation hierarchy. This hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The categorization of a measurement within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows: • Level 1 - Quoted market prices in active markets for identical assets or liabilities • Level 2 - Other observable market-based inputs or unobservable inputs that are corroborated by market data • Level 3 - Significant unobservable inputs Assets and Liabilities Measured at Fair Value on a Recurring Basis The assets and liabilities of the Company that are measured at fair value on a recurring basis using the respective input levels as of August 4, 2017 and February 3, 2017 were as follows: August 4, 2017 February 3, 2017 Level 1 Level 1 Cash equivalents - Money Market Funds $ 58,720 $ 84,339 Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis The carrying amounts of the Company's accounts receivable, accounts payable and accrued expenses approximate their respective fair value due to their short-term nature.

Description of the Business a18

Description of the Business and Basis of Presentation (Policies)	6 Months Ended
	Aug. 04, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation and Consolidation	The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and the requirements of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statement presentation. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. In the opinion of management, all adjustments consisting of normal recurring accruals and disclosures considered necessary for a fair statement have been included. All inter-company accounts and transactions have been eliminated in consolidation. The accompanying condensed consolidated financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto for the year ended February 3, 2017 included in Part II, Item 8 of the Company's Annual Report on Form 10-K filed with the SEC on March 29, 2017 (the "Annual Report").
Fiscal Year	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 2, 2018 and February 3, 2017 as fiscal 2018 and fiscal 2017, respectively. Fiscal 2018 has 52 weeks, and each quarter has 13 weeks. Fiscal 2017 had 53 weeks, and each quarter had 13 weeks except the fourth quarter, which had 14 weeks.
Reclassification	Reclassification 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 such changes 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 peer companies. The reclassifications are 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 Condensed Consolidated Statements of Operations for the three and six months ended July 29, 2016 : Three Months Ended July 29, 2016 As Reported Reclassification As Reclassified Statement of Operations Data: Research and development $ 12,848 $ 4,525 $ 17,373 Sales and marketing 28,639 3,181 31,820 General and administrative 29,306 (7,706 ) 21,600 Total operating expenses $ 70,793 $ — $ 70,793 Six Months Ended July 29, 2016 As Reported Reclassification As Reclassified Statement of Operations Data: Research and development $ 26,444 $ 8,526 $ 34,970 Sales and marketing 56,135 5,947 62,082 General and administrative 57,158 (14,473 ) 42,685 Total operating expenses $ 139,737 $ — $ 139,737 Additional information concerning the effect of these reclassifications on the previously issued quarterly condensed consolidated financial statements is provided in Part II, Item 8, Note 11 to Consolidated Financial Statements included in the Annual Report.
Use of Estimates	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 Condensed Consolidated Statements of Operations, estimates are used when accounting for revenue arrangements, determining the cost of revenue, allocating costs and estimating the impact of contingencies. In the Condensed Consolidated 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 Condensed Consolidated Statements of Operations. Actual results could differ from these estimates.
Recently Adopted/Issued Accounting Pronouncements	Recently Adopted Accounting Pronouncements Compensation - Stock Compensation —In March 2016, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("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 Company adopted this guidance during the three months ended May 5, 2017 with no material impact on its condensed consolidated financial statements. Recently Issued Accounting Pronouncements Compensation - Stock Compensation —In May 2017, the FASB issued ASU No. 2017-09, "Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting." The amendments in this update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting under Topic 718. The amendments are effective for the Company beginning with the Company's 2019 fiscal year, although early adoption is permitted. The Company does not expect these amendments to have a material impact on its consolidated financial statements. Intangibles - Goodwill and Other —In January 2017, the FASB issued ASU No. 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 for annual and interim periods beginning in the Company's 2021 fiscal year, with early adoption permitted, and will be applied on a prospective basis. The Company does not expect that the adoption of this standard will have a material impact 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. 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. Companies are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. 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. The Company continues to evaluate the impact of this guidance on its consolidated financial statements and related disclosures, but 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. 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. 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. The new standard also provides guidance on the accounting for costs to fulfill or obtain a customer contract. Further, the new standard requires additional disclosures to help enable users of the financial statements to better understand the nature, amount, timing, risks and judgments related to revenue recognition and related cash flows from contracts with customers. 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 expects to adopt this standard and its amendments retrospectively to each period presented for the Company's 2019 fiscal year, including interim periods. The Company expects the adoption of the new standard to impact the accounting for costs to fulfill or obtain a customer contract. The impact may affect both the types of costs deferred and the amortization period of deferred costs. The Company continues to evaluate whether the guidance will have additional impacts on its consolidated financial statements and will also monitor for additional impacts due to any changes to the standard or interpretations that become available.
Fair Value Measurements	The Company measures fair value within the guidance of the three-level valuation hierarchy. This hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The categorization of a measurement within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows: • Level 1 - Quoted market prices in active markets for identical assets or liabilities • Level 2 - Other observable market-based inputs or unobservable inputs that are corroborated by market data • Level 3 - Significant unobservable inputs

Description of the Business a19

Description of the Business and Basis of Presentation (Tables)	6 Months Ended
	Aug. 04, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Schedule of Reclassified Operating Expenses	The following table presents the Company's operating expenses as previously reported, and as currently reclassified, on its Condensed Consolidated Statements of Operations for the three and six months ended July 29, 2016 : Three Months Ended July 29, 2016 As Reported Reclassification As Reclassified Statement of Operations Data: Research and development $ 12,848 $ 4,525 $ 17,373 Sales and marketing 28,639 3,181 31,820 General and administrative 29,306 (7,706 ) 21,600 Total operating expenses $ 70,793 $ — $ 70,793 Six Months Ended July 29, 2016 As Reported Reclassification As Reclassified Statement of Operations Data: Research and development $ 26,444 $ 8,526 $ 34,970 Sales and marketing 56,135 5,947 62,082 General and administrative 57,158 (14,473 ) 42,685 Total operating expenses $ 139,737 $ — $ 139,737

Net Loss Per Share (Tables)

Net Loss Per Share (Tables)	6 Months Ended
	Aug. 04, 2017
Earnings Per Share [Abstract]
Schedule of Net Loss Per Common Share, Basic and Diluted	The following table sets forth the computation of net loss per common share (in thousands, except per share amounts): Three Months Ended Six Months Ended August 4, 2017 July 29, 2016 August 4, 2017 July 29, 2016 Numerator: Net loss $ (12,118 ) $ (12,051 ) $ (26,354 ) $ (23,678 ) Denominator: Weighted-average number of shares outstanding: Basic and Diluted 80,353 80,009 80,205 75,169 Loss per common share: Basic and Diluted $ (0.15 ) $ (0.15 ) $ (0.33 ) $ (0.31 ) Weighted-average anti-dilutive stock options, non-vested restricted stock and restricted stock units 3,931 4,925 3,928 2,699

Goodwill and Intangible Assets

Goodwill and Intangible Assets (Tables)	6 Months Ended
	Aug. 04, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of Indefinite-Lived Intangible Assets	The Company's intangible assets as of August 4, 2017 and February 3, 2017 were as follows: August 4, 2017 February 3, 2017 Gross Accumulated Amortization Net Gross Accumulated Amortization Net (in thousands) Customer relationships $ 189,518 $ (56,010 ) $ 133,508 $ 189,518 $ (48,963 ) $ 140,555 Technology 135,584 (51,157 ) 84,427 135,584 (44,336 ) 91,248 Finite-lived intangible assets 325,102 (107,167 ) 217,935 325,102 (93,299 ) 231,803 Trade name 30,118 — 30,118 30,118 — 30,118 Total intangible assets $ 355,220 $ (107,167 ) $ 248,053 $ 355,220 $ (93,299 ) $ 261,921
Schedule of Finite-Lived Intangible Assets	The Company's intangible assets as of August 4, 2017 and February 3, 2017 were as follows: August 4, 2017 February 3, 2017 Gross Accumulated Amortization Net Gross Accumulated Amortization Net (in thousands) Customer relationships $ 189,518 $ (56,010 ) $ 133,508 $ 189,518 $ (48,963 ) $ 140,555 Technology 135,584 (51,157 ) 84,427 135,584 (44,336 ) 91,248 Finite-lived intangible assets 325,102 (107,167 ) 217,935 325,102 (93,299 ) 231,803 Trade name 30,118 — 30,118 30,118 — 30,118 Total intangible assets $ 355,220 $ (107,167 ) $ 248,053 $ 355,220 $ (93,299 ) $ 261,921

Income and Other Taxes (Tables)

Income and Other Taxes (Tables)	6 Months Ended
	Aug. 04, 2017
Income Tax Disclosure [Abstract]
Schedule of Effective Income Tax Rate Reconciliation	The Company's effective income tax rate for the three and six months ended August 4, 2017 and July 29, 2016 was as follows: Three Months Ended Six Months Ended August 4, 2017 July 29, 2016 August 4, 2017 July 29, 2016 Loss before income taxes $ (19,078 ) $ (19,196 ) $ (40,128 ) $ (37,831 ) Income tax benefit $ (6,960 ) $ (7,145 ) $ (13,774 ) $ (14,153 ) Effective tax rate 36.5 % 37.2 % 34.3 % 37.4 %

Related Party Transactions (Tab

Related Party Transactions (Tables)	6 Months Ended
	Aug. 04, 2017
Related Party Transactions [Abstract]
Schedule of Related Party Transactions	As a result of the foregoing related party arrangements, the Company has recorded the following related party balances in the Condensed Consolidated Statements of Financial Position as of August 4, 2017 and February 3, 2017 . During the third quarter of fiscal 2017, the Company began settling in cash its related party balances with Dell on a quarterly basis. August 4, 2017 February 3, 2017 (in thousands) Intercompany receivable $ — $ 1,680 Intercompany payable (16,368 ) (11,832 ) Net intercompany payable (in accrued and other) $ (16,368 ) $ (10,152 ) Accounts receivable from clients under reseller agreements with Dell (included in accounts receivable, net) $ 17,328 $ 16,658 Net operating loss tax sharing receivable under agreement with Dell (included in "Other current assets" at August 4, 2017 and February 3, 2017) $ 24,654 $ 25,091

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	6 Months Ended
	Aug. 04, 2017
Fair Value Disclosures [Abstract]
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis	The assets and liabilities of the Company that are measured at fair value on a recurring basis using the respective input levels as of August 4, 2017 and February 3, 2017 were as follows: August 4, 2017 February 3, 2017 Level 1 Level 1 Cash equivalents - Money Market Funds $ 58,720 $ 84,339

Description of the Business a25

Description of the Business and Basis of Presentation (Details) $ / shares in Units, $ in Thousands	Apr. 27, 2016USD ($)$ / sharesshares	Nov. 24, 2015$ / sharesshares	Jan. 31, 2016shares	Aug. 04, 2017USD ($)$ / sharesshares	Jul. 29, 2016USD ($)	Aug. 04, 2017USD ($)segment$ / sharesshares	Jul. 29, 2016USD ($)	Feb. 03, 2017$ / sharesshares	Apr. 22, 2016$ / sharesshares	Apr. 08, 2016shares
Class of Stock [Line Items]
Preferred stock, shares authorized (in shares) | shares				200,000,000		200,000,000		200,000,000	200,000,000
Preferred stock, par value (usd per share) | $ / shares				$ 0.01		$ 0.01		$ 0.01	$ 0.01
Number of reportable segments | segment						1
Proceeds from initial public offering, net						$ 0	$ 99,604
Discounts, commissions and offering expenses	$ 12,400
Reclassification
Research and development				$ 19,693	$ 17,373	39,172	34,970
Sales and marketing				37,620	31,820	74,789	62,082
General and administrative				21,138	21,600	44,542	42,685
Total operating expenses				$ 78,451	70,793	$ 158,503	139,737
Common Stock, Class A
Class of Stock [Line Items]
Common stock, shares authorized (in shares) | shares			1,000	2,500,000,000		2,500,000,000		2,500,000,000		2,500,000,000
Common stock, par value (usd per share) | $ / shares				$ 0.01		$ 0.01		$ 0.01
Common stock, shares issued (in shares) | shares	8,000,000
Common stock, shares outstanding (in shares) | shares				11,075,000		11,075,000		10,566,000
Price per share (usd per share) | $ / shares	$ 14
Proceeds from initial public offering, net	$ 99,600
Common Stock, Class A | Common Stock
Class of Stock [Line Items]
Common stock, shares issued, conversion of notes (in shares) | shares	2,008,924					372,000
Common Stock, Class B
Class of Stock [Line Items]
Common stock, shares authorized (in shares) | shares			1,000	500,000,000		500,000,000		500,000,000		500,000,000
Common stock, par value (usd per share) | $ / shares				$ 0.01		$ 0.01		$ 0.01
Common stock, shares outstanding (in shares) | shares				70,000,000		70,000,000		70,000,000
Stock split			70,000
As Reported
Reclassification
Research and development					12,848		26,444
Sales and marketing					28,639		56,135
General and administrative					29,306		57,158
Total operating expenses					70,793		139,737
Reclassification
Reclassification
Research and development					4,525		8,526
Sales and marketing					3,181		5,947
General and administrative					(7,706)		(14,473)
Total operating expenses					$ 0		$ 0
Predecessor
Class of Stock [Line Items]
Common stock, shares authorized (in shares) | shares		1,000
Common stock, par value (usd per share) | $ / shares		$ 0.01
Common stock, shares issued (in shares) | shares		1,000
Common stock, shares outstanding (in shares) | shares		1,000
Successor | Common Stock, Class A
Class of Stock [Line Items]
Common stock, shares authorized (in shares) | shares		1,000
Common stock, par value (usd per share) | $ / shares		$ 0.01
Successor | Common Stock, Class B
Class of Stock [Line Items]
Common stock, shares authorized (in shares) | shares		1,000
Common stock, par value (usd per share) | $ / shares		$ 0.01
Common stock, shares issued (in shares) | shares		1,000
Common stock, shares outstanding (in shares) | shares		1,000
IPO | Denali
Class of Stock [Line Items]
Percent of outstanding shares owned						86.30%
Percent of voting interests owned						98.40%

Net Loss Per Share (Details)

Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Aug. 04, 2017	Jul. 29, 2016	Aug. 04, 2017	Jul. 29, 2016
Numerator:
Net loss	$ (12,118)	$ (12,051)	$ (26,354)	$ (23,678)
Denominator:
Weighted average number of shares outstanding, basic and diluted (in shares)	80,353	80,009	80,205	75,169
Loss per common share:
Loss per common share, basic and diluted (usd per share)	$ (0.15)	$ (0.15)	$ (0.33)	$ (0.31)
Weighted-average anti-dilutive stock options, non-vested restricted stock and restricted stock units (in shares)	3,931	4,925	3,928	2,699

Goodwill and Intangible Asset27

Goodwill and Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands	Aug. 04, 2017	Feb. 03, 2017
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 416,487	$ 416,487

Goodwill and Intangible Asset28

Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($)	3 Months Ended		6 Months Ended
	Aug. 04, 2017	Jul. 29, 2016	Aug. 04, 2017	Jul. 29, 2016	Feb. 03, 2017
Finite-Lived Intangible Assets [Line Items]
Gross	$ 325,102,000		$ 325,102,000		$ 325,102,000
Accumulated Amortization	(107,167,000)		(107,167,000)		(93,299,000)
Net	217,935,000		217,935,000		231,803,000
Intangible Assets, Net (Excluding Goodwill) [Abstract]
Gross	355,220,000		355,220,000		355,220,000
Accumulated Amortization	(107,167,000)		(107,167,000)		(93,299,000)
Net	248,053,000		248,053,000		261,921,000
Amortization expense	6,900,000	$ 6,900,000	13,900,000	$ 13,900,000
Impairment charges	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	(56,010,000)		(56,010,000)		(48,963,000)
Net	133,508,000		133,508,000		140,555,000
Intangible Assets, Net (Excluding Goodwill) [Abstract]
Accumulated Amortization	(56,010,000)		(56,010,000)		(48,963,000)
Technology
Finite-Lived Intangible Assets [Line Items]
Gross	135,584,000		135,584,000		135,584,000
Accumulated Amortization	(51,157,000)		(51,157,000)		(44,336,000)
Net	84,427,000		84,427,000		91,248,000
Intangible Assets, Net (Excluding Goodwill) [Abstract]
Accumulated Amortization	$ (51,157,000)		$ (51,157,000)		$ (44,336,000)

Debt (Details)

Debt (Details) - USD ($)	Apr. 27, 2016	Nov. 02, 2015	May 05, 2017	Aug. 04, 2017	Jan. 29, 2016	Feb. 03, 2017	Sep. 14, 2015	Aug. 03, 2015	Jun. 30, 2015
Debt Instrument [Line Items]
Convertible notes outstanding							$ 22,500,000
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
Convertible Notes Payable
Debt Instrument [Line Items]
Maximum principal amount of convertible notes to be sold							$ 500,000	$ 22,000,000	$ 25,000,000
Fair value of the convertible notes					$ 28,000,000
Change in fair value	$ 100,000				$ 5,500,000
Conversion of convertible notes to common stock	$ 28,100,000
Line of Credit | Revolving Credit Facility
Debt Instrument [Line Items]
Maximum borrowing capacity		$ 30,000,000
Debt instrument, term		1 year
Debt instrument, term, extension			1 year
Maximum amount outstanding during period		$ 30,000,000
Additional borrowing capacity		$ 30,000,000
Line of credit, outstanding balance				$ 0		$ 0
Unused capacity, commitment fee percentage				0.35%
Line of Credit | Revolving Credit Facility | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate				1.60%

Stock-Based Compensation And 30

Stock-Based Compensation And Other Long-Term Performance Incentives (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended	6 Months Ended
	Mar. 31, 2017	Aug. 04, 2017	Aug. 04, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of grants issued subject to performance conditions			50.00%
Performance Cash Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period			3 years
Awards granted		$ 0.8	$ 11.6
Compensation expense		$ 0.6	$ 1.1
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	3 years
Awards issued (in shares)		132,574	753,738
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	3 years
Awards issued (in shares)		0	283,988

Income and Other Taxes (Details

Income and Other Taxes (Details) - USD ($)	3 Months Ended		6 Months Ended
	Aug. 04, 2017	Jul. 29, 2016	Aug. 04, 2017	Jul. 29, 2016	Feb. 03, 2017
Valuation Allowance [Line Items]
Loss before income taxes	$ (19,078,000)	$ (19,196,000)	$ (40,128,000)	$ (37,831,000)
Income tax benefit	$ (6,960,000)	$ (7,145,000)	$ (13,774,000)	$ (14,153,000)
Effective tax rate	36.50%	37.20%	34.30%	37.40%
Expense related to vesting of equity awards	$ 0		$ 800,000
Loss carryforwards	3,200,000		3,200,000		$ 2,800,000
Net loss	12,118,000	$ 12,051,000	26,354,000	$ 23,678,000
Unrecognized tax benefits	$ 600,000		600,000		$ 600,000
Prepared using separate return method
Valuation Allowance [Line Items]
Loss before income taxes			(40,100,000)
Income tax benefit			(4,900,000)
Net loss			$ 35,200,000

Related Party Transactions (Det

Related Party Transactions (Details) - USD ($)	3 Months Ended		6 Months Ended
	Aug. 04, 2017	Jul. 29, 2016	Aug. 04, 2017	Jul. 29, 2016
Related Party Transaction [Line Items]
Charged under shared services agreement	$ 21,138,000	$ 21,600,000	$ 44,542,000	$ 42,685,000
Purchases of systems from Dell	56,325,000	52,907,000	110,267,000	102,756,000
Purchases of computer equipment from Dell			8,376,000	7,930,000
Revenues	116,123,000	103,653,000	229,716,000	203,446,000
Dell Inc. | Principal Owner
Related Party Transaction [Line Items]
Charged under shared services agreement	1,200,000	1,300,000	2,500,000	2,700,000
Purchases of systems from Dell	0	200,000	0	3,000,000
Purchases of computer equipment from Dell	800,000	1,000,000	1,500,000	1,500,000
Dell Inc. | Principal Owner | Contracts Not Yet Transferred
Related Party Transaction [Line Items]
Revenues	10,200,000	9,300,000	20,400,000	18,600,000
Dell Inc. | Principal Owner | Solutions Purchases
Related Party Transaction [Line Items]
Revenues	6,700,000	5,000,000	12,600,000	9,900,000
Dell Inc. | Chief Executive Officer
Related Party Transaction [Line Items]
Revenues	23,000	$ 31,000	46,000	$ 54,000
EMC and VMware | Subsidiary of Common Parent
Related Party Transaction [Line Items]
Purchase of annual maintenance services	$ 200,000		400,000
EMC and VMware | Subsidiary of Common Parent | Intercompany Liabilities
Related Party Transaction [Line Items]
Purchase of annual maintenance services			2,200,000
Dell Financial Services | Subsidiary of Common Parent
Related Party Transaction [Line Items]
Purchase of annual maintenance services			$ 3,000,000

Related Party Transactions - Ro

Related Party Transactions - Rollforward (Details) - USD ($) $ in Thousands	Aug. 04, 2017	Feb. 03, 2017
Related Party Transaction [Line Items]
Intercompany receivable	$ 0	$ 1,680
Intercompany payable	(16,368)	(11,832)
Net intercompany payable (in accrued and other)	(16,368)	(10,152)
Net operating loss tax sharing receivable under agreement with Dell (included in Other current assets at August 4, 2017 and February 3, 2017)	6,091	5,704
Dell Inc. | Principal Owner
Related Party Transaction [Line Items]
Accounts receivable from clients under reseller agreements with Dell (included in accounts receivable, net)	17,328	16,658
Net operating loss tax sharing receivable under agreement with Dell (included in Other current assets at August 4, 2017 and February 3, 2017)	$ 24,654	$ 25,091

Fair Value Measurements (Detail

Fair Value Measurements (Details) - USD ($) $ in Thousands	Aug. 04, 2017	Feb. 03, 2017
Money Market Funds | Fair Value, Measurements, Recurring | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents - Money Market Funds	$ 58,720	$ 84,339