Cover Page
Cover Page - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 31, 2020 | Mar. 26, 2020 | Aug. 02, 2019 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Jan. 31, 2020 | ||
Document Transition Report | false | ||
Entity Central Index Key | 001-37748 | ||
Entity Registrant Name | SecureWorks Corp. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 27-0463349 | ||
Entity Address, Address Line One | One Concourse Parkway NE | ||
Entity Address, Address Line Two | Suite 500 | ||
Entity Address, City or Town | Atlanta | ||
Entity Address, State or Province | GA | ||
Entity Address, Postal Zip Code | 30328 | ||
City Area Code | 404 | ||
Local Phone Number | 327-6339 | ||
Title of 12(b) Security | Class A Common Stock, | ||
Trading Symbol | SCWX | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 128.9 | ||
Documents Incorporated by Reference | The information required by Part III of this report, to the extent not set forth herein, is incorporated by reference from the registrant’s proxy statement relating to the annual meeting of stockholders in 2019. Such proxy statement will be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates. | ||
Entity Central Index Key | 0001468666 | ||
Current Fiscal Year End Date | --01-31 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Common Stock, Class A | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding (in shares) | 11,523,081 | ||
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 | Jan. 31, 2020 | Feb. 01, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 181,838 | $ 129,592 |
Accounts receivable, net | 111,798 | 141,344 |
Inventories | 746 | 468 |
Other current assets | 27,449 | 27,604 |
Total current assets | 321,831 | 299,008 |
Property and equipment, net | 27,606 | 35,978 |
Goodwill | 416,487 | 416,487 |
Operating lease right-of-use assets, net | 23,463 | |
Intangible assets, net | 180,052 | 206,448 |
Other non-current assets | 78,592 | 78,238 |
Total assets | 1,048,031 | 1,036,159 |
Current liabilities: | ||
Accounts payable | 18,690 | 16,177 |
Accrued and other current liabilities | 98,855 | 86,495 |
Deferred revenue | 175,847 | 157,865 |
Total current liabilities | 293,392 | 260,537 |
Long-term deferred revenue | 12,690 | 16,064 |
Operating lease liabilities, non-current | 24,669 | |
Other non-current liabilities | 50,400 | 66,851 |
Total liabilities | 381,151 | 343,452 |
Commitments and contingencies (Note 7) | ||
Stockholders' equity: | ||
Preferred stock - $0.01 par value: 200,000 shares authorized; 0 shares issued | 0 | 0 |
Additional paid in capital | 896,983 | 884,567 |
Accumulated deficit | (207,929) | (176,263) |
Accumulated other comprehensive income (loss) | (3,090) | (2,884) |
Treasury stock, at cost - 1,257 and 819 shares, respectively | (19,896) | (13,523) |
Total stockholders' equity | 666,880 | 692,707 |
Total liabilities and stockholders' equity | 1,048,031 | 1,036,159 |
Common Stock, Class A | ||
Stockholders' equity: | ||
Common stock, Class A and Class B, $0.01 par value | 112 | 110 |
Common Stock, Class B | ||
Stockholders' equity: | ||
Common stock, Class A and Class B, $0.01 par value | $ 700 | $ 700 |
Consolidated Statements of Fi_2
Consolidated Statements of Financial Position (Parenthetical) - $ / shares | Jan. 31, 2020 | Feb. 01, 2019 |
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) | 11,206,000 | 11,016,000 |
Common stock, shares outstanding (in shares) | 11,206,000 | 11,016,000 |
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 |
Treasury stock, shares (in shares) | 1,257,000 | 819,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Jan. 31, 2020 | Feb. 01, 2019 | Feb. 02, 2018 | |
Income Statement [Abstract] | |||
Net revenue | $ 552,765 | $ 518,709 | $ 467,930 |
Cost of revenue | 252,796 | 246,117 | 225,084 |
Gross margin | 299,969 | 272,592 | 242,846 |
Research and development | 94,964 | 87,608 | 80,164 |
Sales and marketing | 157,674 | 141,818 | 139,937 |
General and administrative | 99,505 | 91,898 | 92,726 |
Total operating expenses | 352,143 | 321,324 | 312,827 |
Operating loss | (52,174) | (48,732) | (69,981) |
Interest and other, net | 850 | 2,778 | (2,735) |
Loss before income taxes | (51,324) | (45,954) | (72,716) |
Income tax benefit | (19,658) | (6,853) | (62,299) |
Net loss | $ (31,666) | $ (39,101) | $ (10,417) |
Loss per common share, basic and diluted (usd per share) | $ (0.39) | $ (0.48) | $ (0.13) |
Weighted average common shares outstanding, basic and diluted (in shares) | 80,563 | 80,710 | 80,280 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2020 | Feb. 01, 2019 | Feb. 02, 2018 | |
Statement of Comprehensive Income [Abstract] | |||
Net loss | $ (31,666) | $ (39,101) | $ (10,417) |
Foreign currency translation adjustments, net of tax | (206) | (2,914) | 3,544 |
Comprehensive loss | $ (31,872) | $ (42,015) | $ (6,873) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2020 | Feb. 01, 2019 | Feb. 02, 2018 | |
Cash flows from operating activities: | |||
Net loss | $ (31,666) | $ (39,101) | $ (10,417) |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||
Depreciation and amortization | 42,932 | 41,207 | 42,171 |
Stock-based compensation expense | 19,548 | 19,370 | 13,790 |
Effects of exchange rate changes on monetary assets and liabilities denominated in foreign currencies | 270 | (1,818) | 3,256 |
Income tax benefit | (19,658) | (6,853) | (62,299) |
Other non cash impacts | 1,830 | 0 | 0 |
Provision for doubtful accounts | 3,099 | 2,356 | 3,947 |
Changes in assets and liabilities: | |||
Accounts receivable | 26,789 | 13,750 | (48,540) |
Net transactions with parent | (12,483) | (1,797) | 11,024 |
Inventories | (278) | 562 | 917 |
Other assets | 13,293 | (7,277) | 14,610 |
Accounts payable | 7,008 | (6,117) | 3,302 |
Deferred revenue | 14,463 | 20,942 | 19,560 |
Accrued and other current liabilities | 13,692 | 21,975 | 9,466 |
Net cash provided by operating activities | 78,839 | 57,199 | 787 |
Cash flows from investing activities: | |||
Capital expenditures | (12,590) | (10,200) | (13,819) |
Net cash used in investing activities | (12,590) | (10,200) | (13,819) |
Cash flows from financing activities: | |||
Proceeds from stock option exercises | 1,327 | 0 | 0 |
Principal payments on financing arrangement with Dell Financial Services | 0 | (2,208) | (800) |
Taxes paid on vested restricted shares | (8,453) | (2,207) | (1,224) |
Purchases of stock for treasury | (6,377) | (13,531) | 0 |
Payments on financed capital expenditures | (500) | (1,000) | 0 |
Net cash used in financing activities | (14,003) | (18,946) | (2,024) |
Net (decrease) increase in cash and cash equivalents | 52,246 | 28,053 | (15,056) |
Cash and cash equivalents at beginning of the period | 129,592 | 101,539 | 116,595 |
Cash and cash equivalents at end of the period | 181,838 | 129,592 | 101,539 |
Supplemental Disclosures of Non-Cash Investing and Financing Activities: | |||
Financed capital expenditures | 724 | 373 | 1,390 |
Income taxes paid | $ 1,746 | $ 1,961 | $ 1,152 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common StockCommon Stock, Class A | Common StockCommon Stock, Class B | Additional Paid in Capital | Accumulated Deficit | Accumulated Other Comprehensive (Loss) Income | Treasury Stock |
Beginning balance (in shares) at Feb. 03, 2017 | 10,566,000 | 70,000,000 | |||||
Beginning balance at Feb. 03, 2017 | $ 725,455 | $ 107 | $ 700 | $ 854,907 | $ (126,745) | $ (3,514) | $ 0 |
Statement of Shareholders' Equity | |||||||
Net loss | (10,417) | (10,417) | |||||
Other comprehensive (loss) income | 3,544 | 3,544 | |||||
Vesting of restricted stock units (in shares) | 384,000 | ||||||
Vesting of restricted stock units | 0 | $ 4 | (4) | ||||
Grants of restricted stock awards, net (in shares) | 284,000 | ||||||
Grants of restricted stock awards, net | 0 | $ 2 | (2) | ||||
Common stock withheld as payment for withholding taxes upon the vesting of restricted shares (in shares) | (149,000) | ||||||
Common stock withheld as payment for withholding taxes upon the vesting of restricted shares | (1,282) | $ (2) | (1,280) | ||||
Stock-based compensation | 13,790 | 13,790 | |||||
Ending balance (in shares) at Feb. 02, 2018 | 11,085,000 | 70,000,000 | |||||
Ending balance at Feb. 02, 2018 | 731,090 | $ 111 | $ 700 | 867,411 | (137,162) | 30 | 0 |
Statement of Shareholders' Equity | |||||||
Net loss | (39,101) | (39,101) | |||||
Other comprehensive (loss) income | (2,914) | (2,914) | |||||
Vesting of restricted stock units (in shares) | 598,000 | ||||||
Vesting of restricted stock units | 0 | $ 5 | (5) | ||||
Grants of restricted stock awards, net (in shares) | 386,000 | ||||||
Grants of restricted stock awards, net | 0 | $ 4 | (4) | ||||
Common stock withheld as payment for withholding taxes upon the vesting of restricted shares (in shares) | (234,000) | ||||||
Common stock withheld as payment for withholding taxes upon the vesting of restricted shares | (2,207) | $ (2) | (2,205) | ||||
Stock-based compensation | 19,370 | 19,370 | |||||
Shares repurchased (in shares) | (819,000) | ||||||
Shares repurchased | (13,531) | $ (8) | (13,523) | ||||
Ending balance (in shares) at Feb. 01, 2019 | 11,016,000 | 70,000,000 | |||||
Ending balance at Feb. 01, 2019 | 692,707 | $ 110 | $ 700 | 884,567 | (176,263) | (2,884) | (13,523) |
Statement of Shareholders' Equity | |||||||
Net loss | (31,666) | (31,666) | |||||
Other comprehensive (loss) income | (206) | (206) | |||||
Vesting of restricted stock units (in shares) | 957,000 | ||||||
Vesting of restricted stock units | 0 | $ 9 | (9) | ||||
Exercise of stock options (in shares) | 95,000 | ||||||
Exercise of stock options | 1,327 | $ 1 | 1,326 | ||||
Grants of restricted stock awards, net (in shares) | 122,000 | ||||||
Grants of restricted stock awards, net | 0 | $ 1 | (1) | ||||
Cancellation of unvested restricted stock awards (in shares) | (124,000) | ||||||
Cancellation of unvested restricted stock awards | 0 | $ (1) | 1 | ||||
Common stock withheld as payment for withholding taxes upon the vesting of restricted shares (in shares) | (422,000) | ||||||
Common stock withheld as payment for withholding taxes upon the vesting of restricted shares | (8,453) | $ (4) | (8,449) | ||||
Stock-based compensation | $ 19,548 | 19,548 | |||||
Shares repurchased (in shares) | (438,380) | (438,000) | |||||
Shares repurchased | $ (6,377) | $ (4) | (6,373) | ||||
Ending balance (in shares) at Jan. 31, 2020 | 11,206,000 | 70,000,000 | |||||
Ending balance at Jan. 31, 2020 | $ 666,880 | $ 112 | $ 700 | $ 896,983 | $ (207,929) | $ (3,090) | $ (19,896) |
Description of the Business and
Description of the Business and Basis of Presentation | 12 Months Ended |
Jan. 31, 2020 | |
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 technology-driven information security solutions singularly focused on protecting the Company's customers from cyber attacks. On April 27, 2016, the Company completed its initial public offering (“IPO”), as further described below. Upon the closing of the IPO, Dell Technologies Inc. (“Dell Technologies”) owned, indirectly through Dell Inc. (“Dell”) and Dell’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 January 31, 2020 represented approximately 86.2% 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 Company has one primary business activity, which is to provide customers with 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. There are no segment managers who are held accountable for operations and operating results below the consolidated unit level. Accordingly, Secureworks operates its business as a single reportable segment. Basis of Presentation and Consolidation The Company’s 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 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 cost 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 related party transactions, see “ Note 13 —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 11 —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 ended January 31, 2020 , February 1, 2019 and February 2, 2018 , as fiscal 2020 , fiscal 2019 and fiscal 2018 , respectively. Fiscal 2020 , fiscal 2019 and fiscal 2018 each consisted of 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 the cost of revenue, allocating cost 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. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Jan. 31, 2020 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | SIGNIFICANT ACCOUNTING POLICIES Cash and Cash Equivalents. As of January 31, 2020 and February 1, 2019 , cash and cash equivalents are 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 funds are valued using quoted market prices and are included as Level 1 inputs. As of January 31, 2020 and February 1, 2019 , the Company had $100.5 million and $90.7 million , respectively, invested in money market funds. 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 uncollectible. 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 January 31, 2020 and February 1, 2019 , the allowance for doubtful accounts was $5.1 million and $6.2 million , respectively. Unbilled accounts receivable included in accounts receivable, totaling $11.2 million and $13.8 million as of January 31, 2020 and February 1, 2019 , 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 fiscal year. Allowance for Doubtful Accounts. The Company recognizes an allowance for losses on accounts receivable in an amount equal to the estimated probable losses, net of recoveries. The allowance is based on an analysis of historical bad debt experience, current receivables aging, and expected future write-offs, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. The expense associated with the allowance for doubtful accounts is recognized in general and administrative expenses. 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 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 solutions offerings. Inventories are stated at lower of cost or net realizable value, 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 January 31, 2020 , February 1, 2019 and February 2, 2018 , depreciation expense was $14.7 million , $13.5 million and $14.4 million , respectively. Gains or losses related to retirements or disposition of fixed assets are recognized in the period incurred. Leases. The Company determines if any arrangement is, or contains, a lease at inception based on whether or not the Company has the right to control the asset during the contract period and other facts and circumstances. Secureworks is the lessee in a lease contract when the Company obtains the right to control the asset. Operating leases are included in the line items operating lease right-of-use assets, net; accrued and other current liabilities; and operating lease liabilities, non-current in the consolidated statements of financial position. Leases with a lease term of 12 months or less at inception are not recorded in the consolidated statements of financial position and are expensed on a straight-line basis over the lease term in the consolidated statements of operations. The Company determines the lease term by assuming the exercise of renewal options that are reasonably certain. As most of the Company's leases do not provide an implicit interest rate, Secureworks uses the Company's incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. When the Company's contracts contain lease and nonlease components, the Company accounts for both components as a single lease component. Refer to " Note 8 —Leases" for further discussion. 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 impairment on a quarterly basis, or as potential triggering events are identified. 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 that the fair value of the goodwill or indefinite-lived intangible asset is less than its carrying amount, the Company performs the quantitative analysis of the impairment test. The goodwill impairment test consists of a two-step process, if necessary. The first step is to compare the fair value of the reporting unit to its carrying value, including goodwill. The Company used a combination of income (discounted cash flow) and market approach model to determine the fair value of the reporting unit. The assumptions used in the model are consistent with those which the Company believes hypothetical marketplace participants would use. If the fair value of the reporting unit is less than its carrying value, the second step of the impairment test must be performed in order to determine the amount of the impairment loss, if any. The second step requires 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. If the carrying amount of the reporting unit’s goodwill exceeds its implied fair value, an impairment charge is recognized in an amount equal to that excess. The loss recognized cannot exceed the carrying amount of goodwill. 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 value. For indefinite-lived assets, other than goodwill, if the carrying amount determined through the quantitative analysis exceeds the fair value, an impairment charge is recognized in an amount equal to that excess. Deferred Commissions and Deferred Fulfillment Costs. The Company accounts for both costs to obtain a contract for a customer, which are defined as costs that the Company would not have incurred if the contract had not been obtained, and costs to fulfill a contract by capitalizing and systematically amortizing the assets on a basis that is consistent with the transfer to the customer of the goods or services to which the assets relate. These costs generate or enhance resources used in satisfying performance obligations that directly relate to contracts. Applying the practical expedient guidance, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the incremental costs of obtaining contracts that the Company otherwise would have recognized is one year or less. The Company’s customer acquisition costs are primarily attributable to sales commissions and related fringe benefits earned by the Company's sales force and such costs are considered incremental costs to obtain a contract. Sales commissions for initial contracts are deferred and amortized taking into consideration the pattern of transfer to which assets relate and may include expected renewal periods where renewal commissions are not commensurate with the initial commission period. The Company recognizes the deferred commissions on a straight-line basis over the life of the customer relationship (estimated to be six years ) in sales and marketing expenses. These assets are classified as non-current, and included in other non-current assets in the Consolidated Statements of Financial Position. As of January 31, 2020 and February 1, 2019 , the amount of deferred commissions included in other non-current assets was $62.8 million and $62.9 million , respectively. Additionally, the Company incurs certain costs to install and activate hardware and software used in its managed security solutions, primarily related to a portion of the compensation for the personnel who perform the installation activities. The Company makes judgments regarding the fulfillment costs to be capitalized. Specifically, the Company capitalizes direct labor and associated fringe benefits using standards developed from actual costs and applicable operational data. The Company updates the information quarterly for items such as the estimated amount of time required to perform such activity. The Company capitalizes and amortizes these fulfillment costs on a straight-line basis over the economic life of the services, or approximately four years , in cost of revenue. As of January 31, 2020 and February 1, 2019 , the amount of deferred fulfillment costs included in other non-current assets was $11.4 million and $11.0 million , respectively. 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 (losses) gains totaled $(0.3) million , $1.8 million and $(3.3) million in the fiscal years ended January 31, 2020 , February 1, 2019 and February 2, 2018 , respectively. 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. Subscription-based arrangements typically include security solutions, up-front installation fees and maintenance, and also may include the provision of an associated hardware appliance. The Company uses its hardware appliances in providing security solutions required to access the Company’s technology platform. The arrangements that require hardware do not typically convey ownership of the appliance to the customer. Moreover, any related installation fees are non-refundable and are also incapable of being distinct within the context of the arrangement. Therefore, the Company has determined that these arrangements constitute a single performance obligation for which the revenue and any related costs are recognized over the term of the arrangement ratably, which reflects the Company’s performance in transferring control of the services to the customer. Amounts that have been invoiced, but for which the above revenue recognition criteria have not been met, are included in deferred revenue. Professional services consist primarily of fixed-fee and retainer-based contracts. Revenue from these engagements is recognized using an input method over the contract term. 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. The Company recognizes revenue when all of the following criteria are met: • Identification of the contract, or contracts, with a customer— A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer, (ii) the contract has commercial substance and the parties are committed to perform, and (iii) payment terms can be identified and collection of substantially all consideration to which the Company will be entitled in exchange for goods or services that will be transferred is deemed probable based on the customer's intent and ability to pay. Contracts entered into for professional services and subscription-based solutions near or at the same time are generally not combined as a single contract for accounting purposes, since neither the pricing nor the services are interrelated. • Identification of the performance obligations in the contract— Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both (i) capable of being distinct, whereby the customer can benefit from the goods or service either on its own or together with other resources that are readily available from third parties or from the Company, and (ii) distinct in the context of the contract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract. When promised goods or services are incapable of being distinct, the Company accounts for them as a combined performance obligation. With regard to a typical contract for subscription-based solutions, the performance obligation represents a series of distinct services that will be accounted for as a single performance obligation. In a typical professional services contract, the Company has a separate performance obligation associated with each service. The Company is generally acting as a principal in each subscription-based and professional services arrangement and, thus, recognizes revenue on a gross basis. • Determination of the transaction price— The total transaction price is primarily fixed in nature as the consideration is tied to the specific services purchased by the customer, which constitutes a series for delivery of the solutions over the duration of the contract. For professional services contracts, variable consideration exists in the form of rescheduling penalties and expense reimbursements; no estimation is required at contract inception, since variable consideration is allocated to the applicable period. • Allocation of the transaction price to the performance obligations in the contract— The Company allocates the transaction price to each performance obligation based on the performance obligation's standalone selling price. Standalone selling price is determined by considering all information available to the Company, such as historical selling prices of the performance obligation, geographic location, overall strategic pricing objective, market conditions and internally approved pricing guidelines related to the performance obligations. • Recognition of revenue when, or as, the Company satisfies performance obligation— The Company recognizes revenue over time using a time-elapsed output method to measure progress (i.e., ratable recognition) for the subscription-based performance obligation over the contract term. For any upgraded installation services, which the Company has determined represent a performance obligation separate from its subscription-based arrangements, revenue is recognized over time using hours elapsed over the service term as an appropriate method to measure progress. For the performance obligation pertaining to professional services arrangements, the Company recognizes revenue over time using an input method based on time (hours or days) incurred to measure progress over the contract term. As indicated above, the Company has one primary business activity, which is to provide customers with technology-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. There are no segment managers who are held accountable for operations and operating results below the consolidated unit level. Accordingly, the Company is considered to be in a single reportable segment and operating unit structure. The following table presents revenue by service type (in thousands): January 31, 2020 February 1, 2019 February 2, 2018 Managed Security Solutions revenue $ 419,489 $ 396,130 $ 365,768 Security and Risk Consulting revenue 133,276 122,579 102,162 Total revenue $ 552,765 $ 518,709 $ 467,930 Deferred Revenue (Contract Liabilities). 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. The Company has determined that its contracts generally do not include a significant financing component. The primary purpose of the Company's invoicing terms is to provide customers with simplified and predictable ways of purchasing its solutions, not to receive financing from customers or to provide customers with financing. Examples of such terms include invoicing at the beginning of a subscription term with revenue recognized ratably over the contract period. Cost of Revenue. Cost of revenue consists primarily of compensation and related expenses, including salaries, benefits and performance-based compensation for employees who maintain the Counter Threat Platform and provide support services to customers, as well as perform other critical functions. Other expenses include depreciation of equipment and costs associated with maintenance agreements for hardware provided to customers 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 compensation and related expenses, including salaries, benefits, and performance-based compensation, including sales commissions and related expenses for sales and marketing personnel, marketing and advertising programs, including lead generation, customer advocacy events, other brand-building expenses and allocated overhead. Advertising costs are expensed as incurred and were $13.3 million , $12.6 million and $14.7 million for the fiscal years ended January 31, 2020 , February 1, 2019 and February 2, 2018 , 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. The Company capitalizes development costs incurred for software and applications to be sold, leased or otherwise marketed after technological feasibility of the software or application is established. Under the Company’s current practice of developing new software, the technological feasibility of the underlying software or application is not established until substantially all product development and testing is complete, which generally includes the development of a working model. Software development costs that have been capitalized to date have been insignificant. 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 Statement 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 accounts for the tax impact of including Global Intangible Low Tax Income (“GILTI”) in U.S. taxable income as a period cost. 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. Stock-Based Compensation. The Company’s compensation programs include grants under the SecureWorks Corp. 2016 Long-Term Incentive Plan and, prior to the IPO date, grants under share-based payment plans of Dell Technologies. Under the plans, the Company, and prior to the IPO, Dell Technologies, have granted stock options, restricted stock awards and restricted stock units. Compensation expense related to stock-based transactions is measured and recognized in the financial statements based on fair value. Fair value for restricted stock awards and restricted stock units under the Company’s plan is based on the closing price of the Company’s Class A common stock as reported on the Nasdaq Global Select Market on the day of the grant. 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 must 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 Company's annual grant of restricted stock and restricted stock units issued during the fiscal year ended January 31, 2020 vest over an average service period of three years and approximately 50% of such awards are subject to performance conditions. Stock-based compensation expense, with respect to service-based awards is adjusted for forfeitures, and recognized using a straight-line basis over the requisite service periods of the awards, which is generally three to four years . Stock-based compensation expense, with respect to performance awards is adjusted for forfeitures and performance criteria, and recognized on a graded vesting basis. 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 7 –Commitments and Contingencies” for more information about these loss contingencies. Recently Adopted Accounting Pronouncements Leases. The Company adopted Accounting Standards Update ("ASU") No. 2016-02, "Leases (Topic 842)," effective February 2, 2019. Accounting Standards Codification ("ASC") 842 "Leases" requires lessees to recognize operating lease right-of-use ("ROU") assets, representing their right to use the underlying asset for the lease term, and lease liabilities on the balance sheet for all leases with lease terms greater than 12 months. The guidance also requires qualitative and quantitative disclosures designed to assess the amount, timing and uncertainty of cash flows arising from leases. The Company adopted ASU No. 2016-02 using the modified retrospective method and utilized the optional transition method under which the Company will continue to apply the legacy guidance in ASC 840, including its disclosure requirements, in the comparative period presented. In addition, Secureworks elected the package of practical expedients permitted under the transition guidance which permits the Company to: (i) carry forward the historical lease classification; (ii) not separate lease components from non-lease components within the Company's facility lease contracts; (iii) not present comparative periods but rather record a cumulative catch-up during fiscal 2020; and (iv) elect, by asset class, not to record on the balance sheet a lease whose term is twelve months or less including reasonably certain renewal options. As a result of the adoption for the fiscal year beginning February 2, 2019, the Company recorded initial operating lease ROU assets and operating lease liabilities, all related to real estate, of $28.0 million and $31.8 million , respectively. Recently Issued Accounting Pronouncements Income Taxes. In December 2019, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” ASU No. 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in Topic 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill and allocating consolidated income taxes to separate financial statements of entities not subject to income tax. ASU No. 2019-12 is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. Upon adoption, the Company must apply certain aspects of this standard retrospectively for all periods presented while other aspects are applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The Company is currently evaluating the impact of this new standard on its consolidated financial statements. Intangibles - Goodwill and Other - Internal-Use Software. In August 2018, the FASB issued ASU No. 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” ASU No. 2018-15 aligns the requirements for capitalizing implementation costs in such cloud computing arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. 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. Entities may choose to adopt the new guidance prospectively or retrospectively. The Company does not expect that the adoption of this standard will 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 No. 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 materi |
Loss Per Share
Loss Per Share | 12 Months Ended |
Jan. 31, 2020 | |
Earnings Per Share [Abstract] | |
Loss Per Share | LOSS PER SHARE 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 that may 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 loss per common share (in thousands, except per share amounts): Fiscal Year Ended January 31, 2020 February 1, 2019 February 2, 2018 Numerator: Net loss $ (31,666 ) $ (39,101 ) $ (10,417 ) Denominator: Weighted-average number of shares outstanding: Basic and Diluted 80,563 80,710 80,280 Loss per common share: Basic and Diluted $ (0.39 ) $ (0.48 ) $ (0.13 ) Weighted-average anti-dilutive stock options, non-vested restricted stock and restricted stock units 5,826 5,966 5,096 |
Contract Balances and Contract
Contract Balances and Contract Costs | 12 Months Ended |
Jan. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Contract Balances and Contract Costs | CONTRACT BALANCES AND CONTRACT COSTS Promises to provide services related to the Company's subscription-based solutions are accounted for as a single performance obligation over an average period of two years . Performance obligations related to the Company's security and risk consulting professional service contracts are separate obligations associated with each service. Although the Company has many multi-year customer relationships for its various professional service solutions, the arrangement is typically structured as a separate performance obligation over the contract period and recognized over a duration of less than one year . Deferred revenue represents the aggregate amount of billing in advance of service delivery. The deferred revenue balance does not represent the total contract value of annual or multi-year, non-cancelable subscription agreements. Therefore, the Company invoices its customers based on a variety of billing schedules. During the fiscal year ended January 31, 2020 , on average, approximately 58% of the Company's recurring revenue was billed in advance and approximately 42% was billed on either a monthly or quarterly basis. In addition, many of the Company's professional services engagements are billed in advance of service commencement. The deferred revenue balance is influenced by several factors, including seasonality, the compounding effects of renewals, invoice duration and invoice timing. Changes to the Company's deferred revenue during the fiscal years ended January 31, 2020 and February 1, 2019 are as follows (in thousands): As of February 1, 2019 Upfront payments received and billings during the fiscal year ended January 31, 2020 Revenue recognized during the fiscal year ended January 31, 2020 As of January 31, 2020 Deferred revenue $ 173,929 $ 249,215 $ (234,607 ) $ 188,537 As of February 2, 2018 Upfront payments received and billings during the fiscal year ended February 1, 2019 Revenue recognized during the fiscal year ended February 1, 2019 As of February 1, 2019 Deferred revenue $ 152,645 $ 206,960 $ (185,676 ) $ 173,929 Remaining Performance Obligation The remaining performance obligation represents the transaction price allocated to contracted revenue that has not yet been recognized, which includes deferred revenue and non-cancellable contracts that will be invoiced and recognized as revenue in future periods. The remaining performance obligation consists of two elements: (i) the value of remaining services to be provided through the contract term for customers whose services have been activated ("active"); and (ii) the value of services contracted with customers that have not yet been installed ("backlog"). Backlog is not recorded in revenue, deferred revenue or elsewhere in the consolidated financial statements until the Company establishes a contractual right to invoice, at which point it is recorded as revenue or deferred revenue, as appropriate. The Company applies the practical expedient in ASC paragraph 606-10-50-14(a) and does not disclose information about remaining performance obligations that are part of a contract that has an original expected duration of one year or less. The Company expects that the amount of backlog relative to the total value of its contracts will change from year to year due to several factors, including the amount invoiced at the beginning of the contract term, the timing and duration of the Company's customer agreements, varying invoicing cycles of agreements and changes in customer financial circumstances. Accordingly, fluctuations in backlog are not always a reliable indicator of future revenues. As of January 31, 2020 , the Company expects to recognize remaining performance obligations as follows (in thousands): Total Expected to be recognized in the next 12 months Expected to be recognized in 12-24 months Expected to be recognized in 24-36 months Expected to be recognized thereafter Performance obligation - active $ 285,833 $ 160,195 $ 85,660 $ 28,497 $ 11,481 Performance obligation - backlog 25,391 10,067 9,707 5,494 123 Total $ 311,224 $ 170,262 $ 95,367 $ 33,991 $ 11,604 Deferred Commissions and Fulfillment Costs The Company capitalizes a significant portion of its commission expense and related fringe benefits earned by its sales personnel. Additionally, the Company capitalizes certain costs to install and activate hardware and software used in its managed security solutions, primarily related to a portion of the compensation for the personnel who perform the installation activities. These deferred costs are amortized on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the assets relate. Changes in the balance of total deferred commission and total deferred fulfillment costs during the fiscal years ended January 31, 2020 and February 1, 2019 are as follows (in thousands): As of February 1, 2019 Amount capitalized Amount expensed As of January 31, 2020 Deferred commissions $ 62,895 $ 19,053 $ (19,163 ) $ 62,785 Deferred fulfillment costs 10,973 5,921 (5,528 ) 11,366 As of February 2, 2018 Amount capitalized Amount expensed As of February 1, 2019 Deferred commissions $ 57,229 $ 19,915 $ (14,249 ) $ 62,895 Deferred fulfillment costs 10,163 5,920 (5,110 ) 10,973 As referenced in “ Note 2 — Significant Accounting Policies,” deferred commissions are recognized on a straight-line basis over the life of the customer relationship, which historically had been estimated to be seven years . During the third quarter of fiscal 2020, the Company determined to change the estimated life of the customer relationship to be six years , The net impact of this change was an increase in operating loss for the fiscal year ended January 31, 2020 of $3.5 million on a pre-tax basis, or $0.03 on a per share basis. The Company did no t record any impairment losses on the deferred commissions or deferred fulfillment costs during the fiscal year ended January 31, 2020 . |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Jan. 31, 2020 | |
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 January 31, 2020 and February 1, 2019 . Goodwill and indefinite-lived intangible assets are tested for impairment on an annual basis during the third fiscal quarter of each fiscal year, or earlier if an indicator of impairment occurs. The Company completed the most recent annual impairment test in the third quarter of fiscal 2020 by performing a qualitative assessment of goodwill at the reporting unit level, as well as the Company's indefinite-lived intangible asset. 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 step of the quantitative goodwill impairment test was unnecessary. Additionally, based on the qualitative assessment performed in the third quarter of fiscal 2020, the Company determined that it was not more likely than not that the fair value of the other indefinite-lived intangible asset was less than its carrying amount and, therefore, that the first step of the quantitative goodwill impairment test was unnecessary. Further, no triggering events have subsequently transpired that would indicate a potential impairment subsequent to the test date through January 31, 2020 . Intangible Assets The Company's intangible assets at January 31, 2020 and February 1, 2019 were as follows: January 31, 2020 February 1, 2019 Gross Accumulated Amortization Net Gross Accumulated Amortization Net (in thousands) Customer relationships $ 189,518 $ (91,246 ) $ 98,272 $ 189,518 $ (77,152 ) $ 112,366 Technology 137,371 (85,709 ) 51,662 135,584 (71,620 ) 63,964 Finite-lived intangible assets 326,889 (176,955 ) 149,934 325,102 (148,772 ) 176,330 Trade name 30,118 — 30,118 30,118 — 30,118 Total intangible assets $ 357,007 $ (176,955 ) $ 180,052 $ 355,220 $ (148,772 ) $ 206,448 Amortization expense related to finite-lived intangible assets was approximately $28.2 million for the fiscal year ended January 31, 2020 and approximately $27.7 million in each of the fiscal years ended February 1, 2019 and February 2, 2018 , respectively. Amortization expense is included within cost of revenue and general and administrative expenses in the Consolidated Statement of Operations. There were no impairment charges related to intangible assets during the fiscal years ended January 31, 2020 , February 1, 2019 and February 2, 2018 . Estimated future pre-tax amortization expense of finite-lived intangible assets as of January 31, 2020 over the next five years and thereafter is as follows: Fiscal Years (in thousands) 2021 $ 28,332 2022 28,332 2023 27,885 2024 23,491 2025 14,094 Thereafter 27,800 Total $ 149,934 |
Debt
Debt | 12 Months Ended |
Jan. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt | DEBT 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 and was extended on the same terms for an additional one -year term ending on March 26, 2020. During fiscal 2021, the facility was amended and restated to extend the maturity date to March 26, 2021 and to decrease the annual rate at which interest accrues to the applicable London Interbank Offered Rate plus 1.30% . All other terms remained substantially the same. Under the facility, up to $30 million principal amount of borrowings may be outstanding at any time. Amounts under the facility may be borrowed, repaid, and reborrowed from time to time during the term of the facility. The proceeds from loans made under the facility may be used for general corporate purposes. The credit agreement contains customary representations, warranties, covenants 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. The maximum amount of borrowings may be increased by up to an additional $30 million by mutual agreement of the lender and borrower. 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 facility is not guaranteed by SecureWorks Corp. or its subsidiaries. There was no outstanding balance under the credit facility as of January 31, 2020 or February 1, 2019 . |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Jan. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Purchase Obligations —The Company had various purchase obligations at January 31, 2020 over a period of approximately four years with vendors or contractors, subject to the Company’s operational needs. As of January 31, 2020 , the purchase obligations (in thousands) are as follows: Payments Due For Purchase Credit Facilities Fiscal Years Ending Obligations and Other (1) Total 2021 $ 3,645 $ — $ 3,645 2022 1,788 500 2,288 2023 260 — 260 2024 — — — 2025 — — — 2026 and beyond — — — Total $ 5,693 $ 500 $ 6,193 (1) Reflects purchase obligations of annual maintenance services for hardware systems for internal use from a related party. See also “ Note 13 —Related Party Transactions.” 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 a determination is made. As of January 31, 2020 , the Company does not believe that there were any such matters that, individually or in the aggregate, would have a material adverse effect on its business, financial condition, results of operations or cash flows. Customer-based Taxation Contingencie s — Various government entities (“taxing authorities”) require the Company to bill its customers for the taxes they owe based on the services they purchase from the Company. 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 the Company were found to be non-compliant. During the course of an audit, a taxing authority may question the Company's application of its rules in a manner that, if the Company were not successful in substantiating its position, could result in a significant financial impact to the Company. In the course of preparing its financial statements and disclosures, the Company considers 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 customers from certain losses incurred by the customer as to third-party claims relating to the services performed on behalf of the Company or for certain losses incurred by the customer 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 customers of all sizes primarily through its direct sales organization, supplemented by sales through channel partners. During the fiscal years ended January 31, 2020 , February 1, 2019 and February 2, 2018 |
Leases
Leases | 12 Months Ended |
Jan. 31, 2020 | |
Leases [Abstract] | |
Leases | LEASES The Company recorded operating lease cost for facilities of approximately $7.9 million for the year ended January 31, 2020, which included expenses of $1.2 million incurred in connection with the consolidation of certain facilities, and variable lease costs of $1.2 million for utilities and common area charges. For the fiscal year ended January 31, 2020 , the Company recorded operating lease costs of approximately $2.3 million for equipment leases which included short-term lease costs of $1.2 million . Lease expense for equipment was included in cost of revenues. Cash paid for amounts included in the measurement of operating lease liabilities was $6.8 million during the fiscal year ended January 31, 2020. Weighted-average information associated with the measurement of the Company’s remaining operating lease obligations is as follows: January 31, 2020 Weighted-average remaining lease term 5.8 years Weighted-average discount rate 5.33 % The following table summarizes the maturity of the Company's operating lease liabilities as of January 31, 2020 (in thousands): Fiscal Years Ending January 31, 2020 2021 $ 5,017 2022 6,498 2023 5,787 2024 5,346 2025 4,572 Thereafter 7,648 Total operating lease payments $ 34,868 Less imputed interest (5,314 ) Total operating lease liabilities $ 29,554 The Company's leases have remaining lease terms of 1 month to 7 years , inclusive of renewal or termination options that the Company is reasonably certain to exercise. Disclosure related to periods prior to adoption of the new lease standard The Company recorded operating cost for facilities and equipment of approximately $5.5 million and $4.7 million for the years ended February 1, 2019 and February 2, 2018, respectively. As of February 1, 2019, the Company had the following future minimum lease payments under non-cancelable leases prior to the adoption of the new lease standard (in thousands): Fiscal Years Ending February 1, 2019 2020 $ 5,237 2021 4,446 2022 6,190 2023 5,440 2024 4,936 Thereafter 11,825 Total operating lease payments $ 38,074 |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Jan. 31, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | STOCKHOLDERS' EQUITY On September 26, 2018, the Company's board of directors authorized a stock repurchase program, under which the Company was authorized to repurchase up to $15 million of the Company's Class A common stock through September 30, 2019. On March 26, 2019, the board of directors expanded the repurchase program to authorize the repurchase up to an additional $15 million of the Company's Class A common stock through May 1, 2020. Repurchases may be made from time to time through open market purchases, in privately negotiated transactions, or in other types of transactions. The timing and amount of any repurchases under the program will be determined by management based upon market conditions and other factors. During the fiscal year ended January 31, 2020 , the Company repurchased 438,380 shares of Class A common stock at an average price of $14.55 , for an aggregate cost of $6.4 million . As of January 31, 2020 , $10.1 million remained available for further purchases under the stock repurchase program. |
Stock-Based Compensation and Em
Stock-Based Compensation and Employee Benefit Plan | 12 Months Ended |
Jan. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation and Employee Benefit Plan | 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 12,500,000 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. The Company utilizes both authorized and unissued shares to satisfy all shares issued under the 2016 Plan. During fiscal 2019, the 2016 Plan was amended to increase the total shares of Class A common stock available for issuance by an additional 4,000,000 shares. As of January 31, 2020 , there were approximately 4,500,000 shares of Class A common stock available for future grants under the 2016 Plan. 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 years ended January 31, 2020 , February 1, 2019 and February 2, 2018 , no stock options were granted to employees or directors. However, the Company recognized $2.7 million , $3.7 million and $3.7 million in compensation expense for the fiscal years ended January 31, 2020 , February 1, 2019 and February 2, 2018 , respectively, for previously granted options. The fair value of stock options are 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 following table summarizes stock option activity and options outstanding and exercisable for the fiscal years ended, and as of, January 31, 2020 , February 1, 2019 and February 2, 2018 . Number Weighted- Weighted- Weighted-Average Grant date Fair Value Per Share Aggregate Intrinsic Value 1 (in thousands) Balance, February 3, 2017 2,578,167 $ 14.00 Granted — — Exercised — — Canceled, expired or forfeited (53,065 ) 14.00 Balance, February 2, 2018 2,525,102 $ 14.00 Granted — — Exercised (9,826 ) 14.00 Canceled, expired or forfeited (27,514 ) 14.00 Balance, February 1, 2019 2,487,762 $ 14.00 Granted — — Exercised (94,826 ) 14.00 Canceled, expired or forfeited (144,939 ) 14.00 Balance, January 31, 2020 2,247,997 $ 14.00 6.10 $ 6.08 $ 3,890 Options vested and expected to vest, January 31, 2020 2,244,835 $ 14.00 6.10 $ 6.08 $ 3,884 Options exercisable, January 31, 2020 1,646,650 $ 14.00 6.06 $ 6.11 $ 2,849 (1) The aggregate intrinsic values represent the total pre-tax intrinsic values based on the Company's closing share price of $15.73 as reported on the Nasdaq Global Select Market on January 31, 2020 , that would have been received by the option holders had all in-the-money options been exercised as of that date. The total fair value of options vested was $3.6 million , $3.7 million and $3.8 million for the fiscal years ended January 31, 2020 , February 1, 2019 , and February 2, 2018 , respectively. At January 31, 2020 , unrecognized stock-based compensation expense related to stock options was $1.6 million , net of estimated forfeitures, which is expected to be recognized over the weighted-average remaining requisite period of 1.02 years . In connection with the acquisition of Dell by Dell Technologies in 2013, the Company’s compensation programs included grants under the Dell Technologies 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, all unvested time-based awards were forfeited and 32,000 vested time-based stock options remained outstanding and 400,001 performance-based options remained unvested and outstanding subject to award terms. During the fiscal year ended February 1, 2019 , the 400,001 performance-based options vested with a total fair value of $2.4 million . During the fiscal year ended January 31, 2020 , 90,000 options were exercised with a pre-tax intrinsic value of $3.8 million . Cash proceeds received by Dell Technologies from the exercise of these stock options were $1.3 million and the tax benefit realized was $0.9 million for the fiscal year ended January 31, 2020 . As of January 31, 2020 , 32,000 time-based and 310,001 performance-based stock options remained outstanding. Given that all outstanding options vested in fiscal 2019, the Company recognized no related compensation expense for the fiscal year ended January 31, 2020 , while $0.5 million and $0.3 million was recognized for the fiscal years ended February 1, 2019 and February 2, 2018 , respectively. Restricted Stock and Restricted Stock Units Under the 2016 Plan, a restricted stock award ("RSA") 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 Company's 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 ("RSU") 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, the Company granted RSAs and RSUs to employees and directors. The fair value of the RSAs and RSUs was $14.00 per share and all will vest over an average service period of four years . During the fiscal years ended January 31, 2020 , February 1, 2019 and February 2, 2018 the Company issued additional restricted stock and restricted stock units to employees at weighted-average fair values per share of $16.93 , $9.78 and $10.40 , respectively. The Company's annual grant of RSAs and RSUs issued during the fiscal years ended January 31, 2020 , February 1, 2019 and February 2, 2018 vests ratably over three years and approximately 50% of such awards are subject to performance conditions. Of the 3.1 million RSAs and RSUs outstanding on January 31, 2020 , approximately 1.0 million were performance-based awards and 2.1 million were service-based awards. During the fiscal year ended January 31, 2020 , the Company's compensation committee approved an accounting modification to allow 100% payout upon vesting of performance-based awards tied to fiscal year 2020 results. This modification resulted in total incremental expense to be recognized over the remaining service period of approximately $2.6 million , of which $0.4 million was recognized during the fiscal year ended January 31, 2020 . The Company recognized compensation expense related to RSAs and RSUs of $16.8 million , $15.2 million and $9.8 million for the fiscal years ended January 31, 2020 , February 1, 2019 and February 2, 2018 , respectively. At January 31, 2020 , unrecognized stock-based compensation expense related to restricted stock awards and restricted stock units was $25.0 million , which is expected to be recognized over the weighted-average remaining requisite period of 2.22 years . The following table summarizes activity for restricted stock and restricted stock units for the fiscal years ended, and as of, January 31, 2020 , February 1, 2019 and February 2, 2018 . Number of Shares Weighted- Average Grant Date Fair Value Per Share Weighted- Aggregate Intrinsic Value 1 (in thousands) Balance, February 3, 2017 2,242,486 $ 13.21 Granted 1,134,966 10.40 Vested (507,196 ) 13.62 Forfeited (550,697 ) 11.46 Balance, February 2, 2018 2,319,559 $ 12.16 Granted 2,274,508 9.78 Vested (793,723 ) 11.99 Forfeited (453,866 ) 10.69 Balance, February 1, 2019 3,346,478 $ 10.84 Granted 2,087,872 16.93 Vested (1,282,743 ) 11.10 Forfeited (1,088,990 ) 12.44 Balance, January 31, 2020 3,062,617 $ 14.32 1.25 $ 48,175 Restricted stock and restricted stock units expected to vest, January 31, 2020 2,909,217 $ 14.27 1.31 $ 45,762 (1) The aggregate intrinsic values represent the total pre-tax intrinsic values based on the Company's closing share price of $15.73 as reported on the Nasdaq Global Select Market on January 31, 2020 , that would have been received by the restricted stock and restricted stock unit holders had all restricted stock and restricted stock units been issued as of that date. As of January 31, 2020 , restricted stock and restricted stock units representing 3.1 million shares of Class A common stock were outstanding, with an aggregate intrinsic value of $48.2 million based on the Company’s closing stock price as reported on the Nasdaq Global Select Market on January 31, 2020 . The total fair value of Secureworks' restricted stock and restricted stock units that vested during the fiscal years ended January 31, 2020 , February 1, 2019 and February 2, 2018 was $14.2 million , $9.4 million and $6.9 million , respectively, and the pre-tax intrinsic value was $25.3 million , $8.5 million and $4.6 million respectively. 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 January 31, 2020 , February 1, 2019 and February 2, 2018 . Fiscal Year Ended January 31, February 1, February 2, (in thousands) Cost of revenue $ 1,206 $ 780 $ 891 Research and development 4,280 4,133 3,261 Sales and marketing 1,694 2,652 735 General and administrative 12,368 11,805 8,903 Total stock-based compensation expense $ 19,548 $ 19,370 $ 13,790 The tax benefit related to stock-based compensation expense was $4.6 million , $4.7 million and $3.3 million for the fiscal years ended January 31, 2020 , February 1, 2019 and February 2, 2018 respectively. Long-term Performance Cash Awards In March 2017, the Company began granting long-term performance cash awards to certain employees. The employees who receive the 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. For the fiscal years ended January 31, 2020 and February 1, 2019 , the Company granted approximately $6.9 million and $15.7 million of these awards, respectively, and recognized $7.3 million and $6.6 million of related compensation expense, respectively. 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 6% of the participant’s compensation, and participants vest immediately in all contributions to the 401(k) Plan. For the fiscal years ended January 31, 2020 , February 1, 2019 and February 2, 2018 , total expense under this plan was $10.8 million , $10.2 million and $10.7 million , respectively. |
Income and Other Taxes
Income and Other Taxes | 12 Months Ended |
Jan. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income and Other Taxes | INCOME AND OTHER TAXES The Company’s effective income tax rate for the fiscal years ended January 31, 2020 , February 1, 2019 and February 2, 2018 was as follows: Fiscal Year Ended January 31, 2020 February 1, 2019 February 2, 2018 Loss before income taxes $ (51,324 ) $ (45,954 ) $ (72,716 ) Income tax benefit $ (19,658 ) $ (6,853 ) $ (62,299 ) Effective tax rate 38.3 % 14.9 % 85.7 % During the periods presented in the accompanying 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. The change in the Company's effective income tax rate for the fiscal years ended January 31, 2020 and February 1, 2019 was primarily attributable to the impact of certain discrete adjustments related to stock-based compensation expense and the recognition of additional benefits relating to the research and development credits. The change in the Company's effective income tax rate for the fiscal years ended February 1, 2019 and February 2, 2018 was primarily driven by the decrease in the U.S. corporate income tax rate from 35% to 21% and the impact of the minimum tax on foreign earnings from the enactment of the U.S. Tax Cuts and Jobs Act (“U.S. Tax Reform” or the “Act”) that was enacted in December 2017. Throughout the fiscal year ended January 31, 2020 , the U.S. Department of the Treasury and Internal Revenue Service issued preliminary and final regulatory guidance clarifying certain provisions of U.S. Tax Reform, and the Company anticipates additional regulatory guidance and technical clarifications to be issued. When additional guidance and technical clarifications are issued, the Company will recognize the related tax impact in the quarter in which such guidance is issued. The GILTI provisions of the Act signed into law on December 22, 2017 require the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. The Company has elected to account for GILTI as a current period cost included in the year incurred. A reconciliation of the Company's benefit from income taxes to the statutory U.S. federal tax rate is as follows: Fiscal Year Ended January 31, 2020 February 1, 2019 February 2, 2018 U.S. federal statutory rate 21.0 % 21.0 % 33.7 % Impact of foreign operations 0.5 0.2 0.5 State income taxes, net of federal tax benefit 3.2 3.2 2.6 Research and development credits 6.5 4.4 2.1 Nondeductible/nontaxable items (0.6 ) (4.0 ) (2.1 ) U.S. Tax Reform 2.3 (9.4 ) 49.5 Stock-based compensation 5.4 (0.5 ) (0.6 ) Total 38.3 % 14.9 % 85.7 % The benefit for income taxes consists of the following: Fiscal Year Ended January 31, 2020 February 1, 2019 February 2, 2018 (in thousands) Current: Federal $ (8,135 ) $ (527 ) $ (20,288 ) State/Local (895 ) (421 ) (886 ) Foreign 1,918 1,274 80 Current (7,112 ) 326 (21,094 ) Deferred: Federal (10,367 ) (5,930 ) (41,825 ) State/Local (931 ) (1,132 ) (444 ) Foreign (1,248 ) (117 ) 1,064 Deferred (12,546 ) (7,179 ) (41,205 ) Income tax benefit $ (19,658 ) $ (6,853 ) $ (62,299 ) Loss before provision for income taxes consists of the following: Fiscal Year Ended January 31, 2020 February 1, 2019 February 2, 2018 (in thousands) Domestic $ (55,800 ) $ (47,523 ) $ (77,390 ) Foreign 4,476 1,569 4,674 Loss before income taxes $ (51,324 ) $ (45,954 ) $ (72,716 ) The components of the Company's net deferred tax balances are as follows: January 31, 2020 February 1, 2019 (in thousands) Deferred tax assets: Deferred revenue $ 2,743 $ 2,163 Provision for doubtful accounts 1,056 1,245 Credit carryforwards 5,796 — Loss carryforwards 6,673 7,531 Stock-based and deferred compensation 9,249 8,468 Lease right-of-use asset 5,829 — Other 2,135 2,948 Deferred tax assets 33,481 22,355 Valuation allowance (4,613 ) (4,742 ) Deferred tax assets, net of valuation allowance 28,868 17,613 Deferred tax liabilities: Property and equipment (3,733 ) (1,842 ) Purchased intangible assets (44,444 ) (50,509 ) Operating and compensation related accruals (16,723 ) (18,614 ) Lease liability (4,589 ) — Other (1,067 ) (347 ) Deferred tax liabilities (70,556 ) (71,312 ) Net deferred tax liabilities $ (41,688 ) $ (53,699 ) 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 January 31, 2020 and February 1, 2019 , the Company had $4.6 million and $4.7 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 January 31, 2020 . 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 January 31, 2020 and February 1, 2019 . 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 January 31, 2020 would have been $51.3 million , $6.0 million and $45.3 million , respectively, as a result of the recognition of a valuation allowance that would have been recorded on certain deferred tax assets, as well as certain attributes from the Tax Cuts and Jobs Act of 2017 that would be lost if not utilized by the Dell consolidated group. As of January 31, 2020 , the Company has cumulative undistributed foreign earnings that would incur some amount of local withholding and state taxes if the earnings are distributed to SecureWorks Corp., which is domiciled in the United States. U.S. Tax Reform fundamentally changes the U.S. approach to taxation of foreign earnings. The Company has analyzed its global working capital and cash requirements and the potential tax liabilities attributable to repatriation, and has determined that it may be repatriating certain unremitted foreign earnings that were previously deemed indefinitely reinvested. As of January 31, 2020 and February 1, 2019 , the Company has recorded withholding taxes of $0.3 million and $0.3 million , respectively, related to certain unremitted foreign earnings that may be repatriated. A reconciliation of the Company's beginning and ending amount of unrecognized tax benefits is as follows: Fiscal Year Ended January 31, 2020 February 1, 2019 February 2, 2018 (in thousands) Beginning unrecognized tax benefits $ 7,285 $ 763 $ 579 Increases related to tax positions of the current year 27 1,204 285 Increases related to tax position of prior years 13 5,589 — Reductions for tax positions of prior years (1,191 ) (271 ) (101 ) Ending unrecognized tax benefits $ 6,134 $ 7,285 $ 763 The Company's net unrecognized tax benefits of $6.6 million , $7.5 million and $ 0.8 million include amounts reflected in the table above, plus accrued interest and penalties of $0.5 million , $0.3 million and $0.0 million as of January 31, 2020 , February 1, 2019 and February 2, 2018, respectively, and are included in other non-current liabilities in the Consolidated Statements of Financial Position. The net unrecognized tax benefits, if recognized, would increase the Company's income tax benefit and effective income tax benefit rate. Interest and penalties related to income tax liabilities are included in income tax expense. The Company recorded interest and penalties of $0.2 million , $0.2 million and $0.0 million for the fiscal years ended January 31, 2020 , February 1, 2019 and February 2, 2018, respectively. Judgment is required in evaluating the Company's uncertain tax positions and determining the Company's provision for income taxes. The Company does not anticipate a significant change to the total amount of unrecognized tax benefits within the next twelve months. The Company is also currently under income tax audit in foreign jurisdictions. The Company is undergoing negotiations, and in some cases contested proceedings, relating to tax matters with the taxing authorities in these jurisdictions. The Company believes that it has provided adequate reserves related to all matters contained in tax periods open to examination. Although the Company believes it has made adequate provisions for the uncertainties surrounding these audits, should the Company experience unfavorable outcomes, such outcomes could have a material impact on its results of operations, financial position and cash flows. The Company takes certain non-income tax positions in the jurisdictions in which it operates and has received certain non-income tax assessments from various jurisdictions. The Company believes that a material loss in these matters is not probable and that it is not reasonably possible that a material loss exceeding amounts already accrued has been incurred. The Company believes its positions in these non-income tax litigation matters are supportable and that it ultimately will prevail. In the normal course of business, the Company's positions and conclusions related to its non-income taxes could be challenged and assessments may be made. To the extent new information is obtained and the Company's views on its positions, probable outcomes of assessments, or litigation change, changes in estimates to the Company's accrued liabilities would be recorded in the period in which such a determination is made. In the resolution process for income tax and non-income tax audits, the Company may be required to provide collateral guarantees or indemnification to regulators and tax authorities until the matter is resolved. The Company is no longer subject to tax examinations for years prior to fiscal 2013. |
Selected Financial Information
Selected Financial Information | 12 Months Ended |
Jan. 31, 2020 | |
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 January 31, 2020 and February 1, 2019 . Consolidated January 31, 2020 February 1, 2019 (in thousands) Accounts receivable, net: Gross accounts receivable $ 116,919 $ 147,504 Allowance for doubtful accounts (5,121 ) (6,160 ) Total $ 111,798 $ 141,344 Other current assets: Income tax receivable 10,040 6,853 Prepaid maintenance and support agreements 8,425 10,602 Prepaid other 8,984 10,149 Total $ 27,449 $ 27,604 Property and equipment, net Computer equipment $ 53,012 $ 67,468 Leasehold improvements 25,087 26,151 Other equipment 2,956 2,978 Total property and equipment 81,055 96,597 Accumulated depreciation and amortization $ (53,449 ) $ (60,619 ) Total $ 27,606 $ 35,978 Other noncurrent assets Prepaid maintenance agreements 1,260 1,351 Deferred tax asset 1,633 648 Deferred commission and fulfillment costs 74,151 73,868 Other 1,548 2,371 Total $ 78,592 $ 78,238 Accrued and other current liabilities Compensation $ 52,450 $ 48,242 Related party payable, net 3,209 15,634 Other 43,196 22,619 Total $ 98,855 $ 86,495 Other non-current liabilities Deferred tax liabilities $ 43,321 $ 54,347 Other 7,079 12,504 Total $ 50,400 $ 66,851 The allocation between domestic and foreign net revenue is based on the location of the Company’s customers. Net revenue from any single foreign country did not constitute 10% or more of the Company’s net revenue during any of the periods presented. As of January 31, 2020 and February 1, 2019 , net property and equipment in Romania represented 14% and 13% , respectively, of the Company's consolidated net property and equipment. The following tables present net revenue and property, plant and equipment allocated between the United States and international locations. The Company defines international revenue as revenue contracted through non-U.S. entities. Fiscal Year Ended January 31, 2020 February 1, 2019 February 2, 2018 Net revenue United States $ 412,511 $ 403,614 $ 391,159 International 140,254 115,095 76,771 Total $ 552,765 $ 518,709 $ 467,930 January 31, 2020 February 1, 2019 Property and equipment, net United States $ 22,772 $ 29,684 International 4,834 6,294 Total $ 27,606 $ 35,978 |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Jan. 31, 2020 | |
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. The total amounts of the charges under the shared services agreement with Dell were $9.1 million , $3.7 million and $4.9 million for the fiscal years ended January 31, 2020 , February 1, 2019 and February 2, 2018 , respectively. Management believes that the basis on which the expenses have been allocated is a reasonable reflection of the utilization of services provided to or the benefit received by the 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 computer equipment for internal use from Dell and its subsidiaries that is capitalized within property and equipment in the 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 and EMC Corporation, a wholly-owned subsidiary of Dell that provides enterprise software and storage ("EMC"), totaled $3.1 million , $2.7 million and $2.6 million for the fiscal years ended January 31, 2020 , February 1, 2019 and February 2, 2018 , respectively. 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, software licenses and hardware systems for internal use from Dell, EMC and VMware totaled $3.4 million , $1.2 million and $1.3 million for the fiscal years ended January 31, 2020 , February 1, 2019 and February 2, 2018 , respectively. Additionally, during the fiscal year ended January 31, 2020 , VMware acquired Carbon Black Inc., a security business with which the Company had an existing commercial relationship. From the date of the acquisition through the end of fiscal 2020, purchases of solutions by the Company from Carbon Black totaled $2.2 million and, as of January 31, 2020 , the Company had liabilities to Carbon Black totaling $0.3 million . The Company recognized revenue related to security solutions provided to other subsidiaries of Dell Technologies, consisting of RSA Security LLC, Pivotal Software, Inc. and Boomi, Inc. The revenue recognized by the Company for security solutions provided to these entities totaled $0.1 million , $0.3 million and $0.2 million for the fiscal years ended January 31, 2020 , February 1, 2019 and February 2, 2018 , respectively. Purchases by the Company from these other subsidiaries totaled $0.1 million , $0.7 million and $0.1 million during the fiscal years ended January 31, 2020 , February 1, 2019 and February 2, 2018 , respectively. The Company also recognized revenue related to solutions provided to significant beneficial owners of Secureworks common stock, which include Michael S. Dell, Chairman and Chief Executive Officer of Dell Technologies, and affiliates of Mr. Dell. The revenues recognized by the Company from solutions provided to Mr. Dell, MSD Capital, L.P. (a firm founded for the purposes of managing investments of Mr. Dell and his family), DFI Resources LLC, an entity affiliated with Mr. Dell, and the Michael and Susan Dell Foundation totaled $0.4 million , $0.5 million and $0.4 million for the fiscal years ended January 31, 2020 , February 1, 2019 and February 2, 2018 , respectively. The Company provides solutions to certain customers whose legal contractual relationship has historically been with Dell rather than Secureworks, although the Company has the primary responsibility to provide the services. 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 customer contracts were transferred from Dell to the Company, forming a direct legal contractual relationship between the Company and the end customer. For customers whose contracts have not yet been transferred or whose contracts were subsequently originated through Dell under a reseller agreement, the Company recognized revenues of approximately $57.8 million , $59.0 million and $44.7 million for the fiscal years ended January 31, 2020 , February 1, 2019 and February 2, 2018 , respectively. In addition, as of January 31, 2020 , the Company had approximately $1.8 million of contingent obligations to Dell related to outstanding performance bonds for certain customer contracts, which Dell issued on behalf of the Company. As the Company’s customer and on behalf of certain of its own customers, Dell also purchases solutions from the Company. Beginning in the third quarter of the fiscal year ended January 29, 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 $27.2 million , $16.6 million , and $21.1 million for the fiscal years ended January 31, 2020 , February 1, 2019 , and February 2, 2018 , respectively. As a result of the foregoing related party arrangements beginning in the third quarter of the fiscal year ended January 29, 2016, the Company has recorded the following related party balances in the Consolidated Statement of Financial Position as of January 31, 2020 and February 1, 2019 : January 31, 2020 February 1, 2019 (in thousands) Related party payable (in accrued and other current liabilities) $ 3,209 $ 15,634 Accounts receivable from customers under reseller agreements with Dell (in accounts receivable, net) $ 13,674 $ 21,760 Net operating loss tax sharing receivable under agreement with Dell (in other current assets) $ 10,040 $ 6,853 |
Unaudited Quarterly Results of
Unaudited Quarterly Results of Operations | 12 Months Ended |
Jan. 31, 2020 | |
Quarterly Financial Information Disclosure [Abstract] | |
Unaudited Quarterly Results of Operations | UNAUDITED QUARTERLY RESULTS OF OPERATIONS The following ta ble presents selected unaudited Statements of Operations for each quarter of fiscal 2020 and fiscal 2019. The statement have been prepared on a basis consistent with our audited annual financial statements included in this Annual Report on Form 10-K and include, in the Company's opinion, all normal recurring adjustments necessary for the fair presentation of the financial information contained in those statements. The following quarterly financial data should be read in conjunction with the audited financial statements and the related notes included in this Annual Report on Form 10-K. Fiscal Year 2020 First Second Third Fourth Quarter Quarter Quarter Quarter Net revenue $ 132,842 $ 136,605 $ 141,332 $ 141,986 Gross margin $ 70,001 $ 73,010 $ 79,764 $ 77,194 Net loss $ (8,270 ) $ (10,260 ) $ (7,908 ) $ (5,228 ) Net loss per common share (basic and diluted) (1) $ (0.10 ) $ (0.13 ) $ (0.10 ) $ (0.06 ) Weighted-average common shares outstanding (basic and diluted) 80,467 80,674 80,518 80,591 (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. Fiscal Year 2019 First Second Third Fourth Quarter Quarter Quarter Quarter Net revenue $ 126,161 $ 128,778 $ 133,060 $ 130,710 Gross margin $ 65,631 $ 66,230 $ 70,927 $ 69,804 Net (loss) income $ (13,819 ) $ (9,769 ) $ (3,735 ) $ (11,778 ) Net (loss) income per common share (basic and diluted) (1) $ (0.17 ) $ (0.12 ) $ (0.05 ) $ (0.15 ) Weighted-average common shares outstanding (basic and diluted) 80,522 80,839 80,892 80,587 (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. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Jan. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (COVID-19) a global pandemic and recommended containment and mitigation measures worldwide. At this point, the Company cannot reasonably estimate the length or severity of this pandemic, or the extent to which the disruption may impact the Company’s consolidated financial position, consolidated results of operations, and consolidated cash flows in fiscal 2021. Due to the Company’s subscription-based business model, the effect of COVID-19 may not be fully reflected in the Company’s results of operations until future periods, if at all. Effective as of March 26, 2019, SecureWorks, Inc., the Company's wholly-owned subsidiary, extended a revolving credit agreement with a wholly-owned subsidiary of Dell Inc. under which the Company has a $30 million senior unsecured revolving credit facility. This facility was scheduled to expire on March 26, 2020. Subsequent to the end of fiscal 2020, the revolving credit agreement was further amended and restated, effective as of March 26, 2020 , to extend the maturity date to March 26, 2021 and to decrease the annual rate at which interest accrues from the applicable London interbank offered rate plus 1.50% to such rate plus 1.30% . The amended and restated revolving credit agreement otherwise has terms substantially similar to those of the facility before the amendment and restatement. |
Valuation and Qualifying Accoun
Valuation and Qualifying Accounts | 12 Months Ended |
Jan. 31, 2020 | |
SEC Schedule, 12-09, 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: 2020 Allowance for doubtful accounts $ 6,160 $ 3,099 $ (4,138 ) $ 5,121 2019 Allowance for doubtful accounts $ 8,246 $ 2,356 $ (4,442 ) $ 6,160 2018 Allowance for doubtful accounts $ 6,132 $ 3,947 $ (1,833 ) $ 8,246 |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Jan. 31, 2020 | |
Accounting Policies [Abstract] | |
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 ended January 31, 2020 , February 1, 2019 and February 2, 2018 , as fiscal 2020 , fiscal 2019 and fiscal 2018 , respectively. Fiscal 2020 , fiscal 2019 and fiscal 2018 each consisted of 52 weeks. |
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 Consolidated Statements of Operations, estimates are used when accounting for revenue arrangements, determining the cost of revenue, allocating cost 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 January 31, 2020 and February 1, 2019 |
Accounts Receivable and Allowance for Doubtful Accounts | 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 uncollectible. 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 January 31, 2020 and February 1, 2019 , the allowance for doubtful accounts was $5.1 million and $6.2 million , respectively. Unbilled accounts receivable included in accounts receivable, totaling $11.2 million and $13.8 million as of January 31, 2020 and February 1, 2019 , 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 fiscal year. Allowance for Doubtful Accounts. The Company recognizes an allowance for losses on accounts receivable in an amount equal to the estimated probable losses, net of recoveries. The allowance is based on an analysis of historical bad debt experience, current receivables aging, and expected future write-offs, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. The expense associated with the allowance for doubtful accounts is recognized in general and administrative expenses. |
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 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 solutions offerings. Inventories are stated at lower of cost or net realizable value, 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 January 31, 2020 , February 1, 2019 and February 2, 2018 , depreciation expense was $14.7 million , $13.5 million and $14.4 million , respectively. Gains or losses related to retirements or disposition of fixed assets are recognized in the period incurred. |
Leases | Leases. |
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 impairment on a quarterly basis, or as potential triggering events are identified. 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 that the fair value of the goodwill or indefinite-lived intangible asset is less than its carrying amount, the Company performs the quantitative analysis of the impairment test. The goodwill impairment test consists of a two-step process, if necessary. The first step is to compare the fair value of the reporting unit to its carrying value, including goodwill. The Company used a combination of income (discounted cash flow) and market approach model to determine the fair value of the reporting unit. The assumptions used in the model are consistent with those which the Company believes hypothetical marketplace participants would use. If the fair value of the reporting unit is less than its carrying value, the second step of the impairment test must be performed in order to determine the amount of the impairment loss, if any. The second step requires 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. If the carrying amount of the reporting unit’s goodwill exceeds its implied fair value, an impairment charge is recognized in an amount equal to that excess. The loss recognized cannot exceed the carrying amount of goodwill. 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 value. For indefinite-lived assets, other than goodwill, if the carrying amount determined through the quantitative analysis exceeds the fair value, an impairment charge is recognized in an amount equal to that excess. |
Revenue Recognition | Deferred Commissions and Deferred Fulfillment Costs. The Company accounts for both costs to obtain a contract for a customer, which are defined as costs that the Company would not have incurred if the contract had not been obtained, and costs to fulfill a contract by capitalizing and systematically amortizing the assets on a basis that is consistent with the transfer to the customer of the goods or services to which the assets relate. These costs generate or enhance resources used in satisfying performance obligations that directly relate to contracts. Applying the practical expedient guidance, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the incremental costs of obtaining contracts that the Company otherwise would have recognized is one year or less. The Company’s customer acquisition costs are primarily attributable to sales commissions and related fringe benefits earned by the Company's sales force and such costs are considered incremental costs to obtain a contract. Sales commissions for initial contracts are deferred and amortized taking into consideration the pattern of transfer to which assets relate and may include expected renewal periods where renewal commissions are not commensurate with the initial commission period. The Company recognizes the deferred commissions on a straight-line basis over the life of the customer relationship (estimated to be six years ) in sales and marketing expenses. These assets are classified as non-current, and included in other non-current assets in the Consolidated Statements of Financial Position. As of January 31, 2020 and February 1, 2019 , the amount of deferred commissions included in other non-current assets was $62.8 million and $62.9 million , respectively. Additionally, the Company incurs certain costs to install and activate hardware and software used in its managed security solutions, primarily related to a portion of the compensation for the personnel who perform the installation activities. The Company makes judgments regarding the fulfillment costs to be capitalized. Specifically, the Company capitalizes direct labor and associated fringe benefits using standards developed from actual costs and applicable operational data. The Company updates the information quarterly for items such as the estimated amount of time required to perform such activity. The Company capitalizes and amortizes these fulfillment costs on a straight-line basis over the economic life of the services, or approximately four years 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. Subscription-based arrangements typically include security solutions, up-front installation fees and maintenance, and also may include the provision of an associated hardware appliance. The Company uses its hardware appliances in providing security solutions required to access the Company’s technology platform. The arrangements that require hardware do not typically convey ownership of the appliance to the customer. Moreover, any related installation fees are non-refundable and are also incapable of being distinct within the context of the arrangement. Therefore, the Company has determined that these arrangements constitute a single performance obligation for which the revenue and any related costs are recognized over the term of the arrangement ratably, which reflects the Company’s performance in transferring control of the services to the customer. Amounts that have been invoiced, but for which the above revenue recognition criteria have not been met, are included in deferred revenue. Professional services consist primarily of fixed-fee and retainer-based contracts. Revenue from these engagements is recognized using an input method over the contract term. 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. The Company recognizes revenue when all of the following criteria are met: • Identification of the contract, or contracts, with a customer— A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer, (ii) the contract has commercial substance and the parties are committed to perform, and (iii) payment terms can be identified and collection of substantially all consideration to which the Company will be entitled in exchange for goods or services that will be transferred is deemed probable based on the customer's intent and ability to pay. Contracts entered into for professional services and subscription-based solutions near or at the same time are generally not combined as a single contract for accounting purposes, since neither the pricing nor the services are interrelated. • Identification of the performance obligations in the contract— Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both (i) capable of being distinct, whereby the customer can benefit from the goods or service either on its own or together with other resources that are readily available from third parties or from the Company, and (ii) distinct in the context of the contract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract. When promised goods or services are incapable of being distinct, the Company accounts for them as a combined performance obligation. With regard to a typical contract for subscription-based solutions, the performance obligation represents a series of distinct services that will be accounted for as a single performance obligation. In a typical professional services contract, the Company has a separate performance obligation associated with each service. The Company is generally acting as a principal in each subscription-based and professional services arrangement and, thus, recognizes revenue on a gross basis. • Determination of the transaction price— The total transaction price is primarily fixed in nature as the consideration is tied to the specific services purchased by the customer, which constitutes a series for delivery of the solutions over the duration of the contract. For professional services contracts, variable consideration exists in the form of rescheduling penalties and expense reimbursements; no estimation is required at contract inception, since variable consideration is allocated to the applicable period. • Allocation of the transaction price to the performance obligations in the contract— The Company allocates the transaction price to each performance obligation based on the performance obligation's standalone selling price. Standalone selling price is determined by considering all information available to the Company, such as historical selling prices of the performance obligation, geographic location, overall strategic pricing objective, market conditions and internally approved pricing guidelines related to the performance obligations. • Recognition of revenue when, or as, the Company satisfies performance obligation— The Company recognizes revenue over time using a time-elapsed output method to measure progress (i.e., ratable recognition) for the subscription-based performance obligation over the contract term. For any upgraded installation services, which the Company has determined represent a performance obligation separate from its subscription-based arrangements, revenue is recognized over time using hours elapsed over the service term as an appropriate method to measure progress. For the performance obligation pertaining to professional services arrangements, the Company recognizes revenue over time using an input method based on time (hours or days) incurred to measure progress over the contract term. As indicated above, the Company has one primary business activity, which is to provide customers with technology-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. There are no segment managers who are held accountable for operations and operating results below the consolidated unit level. Accordingly, the Company is considered to be in a single reportable segment and operating unit structure. The following table presents revenue by service type (in thousands): January 31, 2020 February 1, 2019 February 2, 2018 Managed Security Solutions revenue $ 419,489 $ 396,130 $ 365,768 Security and Risk Consulting revenue 133,276 122,579 102,162 Total revenue $ 552,765 $ 518,709 $ 467,930 Deferred Revenue (Contract Liabilities). 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. The Company has determined that its contracts generally do not include a significant financing component. The primary purpose of the Company's invoicing terms is to provide customers with simplified and predictable ways of purchasing its solutions, not to receive financing from customers or to provide customers with financing. Examples of such terms include invoicing at the beginning of a subscription term with revenue recognized ratably over the contract period. Cost of Revenue. Cost of revenue consists primarily of compensation and related expenses, including salaries, benefits and performance-based compensation for employees who maintain the Counter Threat Platform and provide support services to customers, as well as perform other critical functions. Other expenses include depreciation of equipment and costs associated with maintenance agreements for hardware provided to customers 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. |
Foreign Currency Translation | Foreign Currency Translation. |
Research and Development Costs | Research and Development Costs. |
Sales and Marketing, General and Administrative | Sales and Marketing. Sales and marketing expense includes compensation and related expenses, including salaries, benefits, and performance-based compensation, including sales commissions and related expenses for sales and marketing personnel, marketing and advertising programs, including lead generation, customer advocacy events, other brand-building expenses and allocated overhead. Advertising costs are expensed as incurred and were $13.3 million , $12.6 million and $14.7 million for the fiscal years ended January 31, 2020 , February 1, 2019 and February 2, 2018 , 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. The Company capitalizes development costs incurred for software and applications to be sold, leased or otherwise marketed after technological feasibility of the software or application is established. Under the Company’s current practice of developing new software, the technological feasibility of the underlying software or application is not established until substantially all product development and testing is complete, which generally includes the development of a working model. Software development costs that have been capitalized to date have been insignificant. |
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 Statement 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 accounts for the tax impact of including Global Intangible Low Tax Income (“GILTI”) in U.S. taxable income as a period cost. 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. |
Stock-Based Compensation | Stock-Based Compensation. The Company’s compensation programs include grants under the SecureWorks Corp. 2016 Long-Term Incentive Plan and, prior to the IPO date, grants under share-based payment plans of Dell Technologies. Under the plans, the Company, and prior to the IPO, Dell Technologies, have granted stock options, restricted stock awards and restricted stock units. Compensation expense related to stock-based transactions is measured and recognized in the financial statements based on fair value. Fair value for restricted stock awards and restricted stock units under the Company’s plan is based on the closing price of the Company’s Class A common stock as reported on the Nasdaq Global Select Market on the day of the grant. 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 must 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 Company's annual grant of restricted stock and restricted stock units issued during the fiscal year ended January 31, 2020 vest over an average service period of three years and approximately 50% of such awards are subject to performance conditions. Stock-based compensation expense, with respect to service-based awards is adjusted for forfeitures, and recognized using a straight-line basis over the requisite service periods of the awards, which is generally three to four years . Stock-based compensation expense, with respect to performance awards is adjusted for forfeitures and performance criteria, and recognized on a graded vesting basis. 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 7 –Commitments and Contingencies” for more information about these loss contingencies. |
Recently Adopted and Recently Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncements Leases. The Company adopted Accounting Standards Update ("ASU") No. 2016-02, "Leases (Topic 842)," effective February 2, 2019. Accounting Standards Codification ("ASC") 842 "Leases" requires lessees to recognize operating lease right-of-use ("ROU") assets, representing their right to use the underlying asset for the lease term, and lease liabilities on the balance sheet for all leases with lease terms greater than 12 months. The guidance also requires qualitative and quantitative disclosures designed to assess the amount, timing and uncertainty of cash flows arising from leases. The Company adopted ASU No. 2016-02 using the modified retrospective method and utilized the optional transition method under which the Company will continue to apply the legacy guidance in ASC 840, including its disclosure requirements, in the comparative period presented. In addition, Secureworks elected the package of practical expedients permitted under the transition guidance which permits the Company to: (i) carry forward the historical lease classification; (ii) not separate lease components from non-lease components within the Company's facility lease contracts; (iii) not present comparative periods but rather record a cumulative catch-up during fiscal 2020; and (iv) elect, by asset class, not to record on the balance sheet a lease whose term is twelve months or less including reasonably certain renewal options. As a result of the adoption for the fiscal year beginning February 2, 2019, the Company recorded initial operating lease ROU assets and operating lease liabilities, all related to real estate, of $28.0 million and $31.8 million , respectively. Recently Issued Accounting Pronouncements Income Taxes. In December 2019, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” ASU No. 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in Topic 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill and allocating consolidated income taxes to separate financial statements of entities not subject to income tax. ASU No. 2019-12 is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. Upon adoption, the Company must apply certain aspects of this standard retrospectively for all periods presented while other aspects are applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The Company is currently evaluating the impact of this new standard on its consolidated financial statements. Intangibles - Goodwill and Other - Internal-Use Software. In August 2018, the FASB issued ASU No. 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” ASU No. 2018-15 aligns the requirements for capitalizing implementation costs in such cloud computing arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. 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. Entities may choose to adopt the new guidance prospectively or retrospectively. The Company does not expect that the adoption of this standard will 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 No. 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. 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 does not expect that the adoption of this standard will have a material impact on its consolidated financial statements. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 12 Months Ended |
Jan. 31, 2020 | |
Accounting Policies [Abstract] | |
Disaggregation of Revenue | The following table presents revenue by service type (in thousands): January 31, 2020 February 1, 2019 February 2, 2018 Managed Security Solutions revenue $ 419,489 $ 396,130 $ 365,768 Security and Risk Consulting revenue 133,276 122,579 102,162 Total revenue $ 552,765 $ 518,709 $ 467,930 |
Loss Per Share (Tables)
Loss Per Share (Tables) | 12 Months Ended |
Jan. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Net Loss Per Common Share | The following table sets forth the computation of loss per common share (in thousands, except per share amounts): Fiscal Year Ended January 31, 2020 February 1, 2019 February 2, 2018 Numerator: Net loss $ (31,666 ) $ (39,101 ) $ (10,417 ) Denominator: Weighted-average number of shares outstanding: Basic and Diluted 80,563 80,710 80,280 Loss per common share: Basic and Diluted $ (0.39 ) $ (0.48 ) $ (0.13 ) Weighted-average anti-dilutive stock options, non-vested restricted stock and restricted stock units 5,826 5,966 5,096 |
Contract Balances and Contrac_2
Contract Balances and Contract Costs (Tables) | 12 Months Ended |
Jan. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Deferred Revenue | Changes to the Company's deferred revenue during the fiscal years ended January 31, 2020 and February 1, 2019 are as follows (in thousands): As of February 1, 2019 Upfront payments received and billings during the fiscal year ended January 31, 2020 Revenue recognized during the fiscal year ended January 31, 2020 As of January 31, 2020 Deferred revenue $ 173,929 $ 249,215 $ (234,607 ) $ 188,537 As of February 2, 2018 Upfront payments received and billings during the fiscal year ended February 1, 2019 Revenue recognized during the fiscal year ended February 1, 2019 As of February 1, 2019 Deferred revenue $ 152,645 $ 206,960 $ (185,676 ) $ 173,929 |
Expected Timing to Recognize Remaining Performance Obligation | As of January 31, 2020 , the Company expects to recognize remaining performance obligations as follows (in thousands): Total Expected to be recognized in the next 12 months Expected to be recognized in 12-24 months Expected to be recognized in 24-36 months Expected to be recognized thereafter Performance obligation - active $ 285,833 $ 160,195 $ 85,660 $ 28,497 $ 11,481 Performance obligation - backlog 25,391 10,067 9,707 5,494 123 Total $ 311,224 $ 170,262 $ 95,367 $ 33,991 $ 11,604 |
Schedule of Deferred Commissions and Fulfillment Costs | Changes in the balance of total deferred commission and total deferred fulfillment costs during the fiscal years ended January 31, 2020 and February 1, 2019 are as follows (in thousands): As of February 1, 2019 Amount capitalized Amount expensed As of January 31, 2020 Deferred commissions $ 62,895 $ 19,053 $ (19,163 ) $ 62,785 Deferred fulfillment costs 10,973 5,921 (5,528 ) 11,366 As of February 2, 2018 Amount capitalized Amount expensed As of February 1, 2019 Deferred commissions $ 57,229 $ 19,915 $ (14,249 ) $ 62,895 Deferred fulfillment costs 10,163 5,920 (5,110 ) 10,973 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Jan. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Indefinite-Lived Intangible Assets | The Company's intangible assets at January 31, 2020 and February 1, 2019 were as follows: January 31, 2020 February 1, 2019 Gross Accumulated Amortization Net Gross Accumulated Amortization Net (in thousands) Customer relationships $ 189,518 $ (91,246 ) $ 98,272 $ 189,518 $ (77,152 ) $ 112,366 Technology 137,371 (85,709 ) 51,662 135,584 (71,620 ) 63,964 Finite-lived intangible assets 326,889 (176,955 ) 149,934 325,102 (148,772 ) 176,330 Trade name 30,118 — 30,118 30,118 — 30,118 Total intangible assets $ 357,007 $ (176,955 ) $ 180,052 $ 355,220 $ (148,772 ) $ 206,448 |
Schedule of Finite-Lived Intangible Assets | The Company's intangible assets at January 31, 2020 and February 1, 2019 were as follows: January 31, 2020 February 1, 2019 Gross Accumulated Amortization Net Gross Accumulated Amortization Net (in thousands) Customer relationships $ 189,518 $ (91,246 ) $ 98,272 $ 189,518 $ (77,152 ) $ 112,366 Technology 137,371 (85,709 ) 51,662 135,584 (71,620 ) 63,964 Finite-lived intangible assets 326,889 (176,955 ) 149,934 325,102 (148,772 ) 176,330 Trade name 30,118 — 30,118 30,118 — 30,118 Total intangible assets $ 357,007 $ (176,955 ) $ 180,052 $ 355,220 $ (148,772 ) $ 206,448 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Estimated future pre-tax amortization expense of finite-lived intangible assets as of January 31, 2020 over the next five years and thereafter is as follows: Fiscal Years (in thousands) 2021 $ 28,332 2022 28,332 2023 27,885 2024 23,491 2025 14,094 Thereafter 27,800 Total $ 149,934 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Jan. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | As of January 31, 2020 , the purchase obligations (in thousands) are as follows: Payments Due For Purchase Credit Facilities Fiscal Years Ending Obligations and Other (1) Total 2021 $ 3,645 $ — $ 3,645 2022 1,788 500 2,288 2023 260 — 260 2024 — — — 2025 — — — 2026 and beyond — — — Total $ 5,693 $ 500 $ 6,193 (1) Reflects purchase obligations of annual maintenance services for hardware systems for internal use from a related party. See also “ Note 13 —Related Party Transactions.” |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Jan. 31, 2020 | |
Leases [Abstract] | |
Weighted-Average Information Associated with Remaining Operating Lease Obligations | Weighted-average information associated with the measurement of the Company’s remaining operating lease obligations is as follows: January 31, 2020 Weighted-average remaining lease term 5.8 years Weighted-average discount rate 5.33 % |
Maturities of Operating Lease Liabilities | As of February 1, 2019, the Company had the following future minimum lease payments under non-cancelable leases prior to the adoption of the new lease standard (in thousands): Fiscal Years Ending February 1, 2019 2020 $ 5,237 2021 4,446 2022 6,190 2023 5,440 2024 4,936 Thereafter 11,825 Total operating lease payments $ 38,074 The following table summarizes the maturity of the Company's operating lease liabilities as of January 31, 2020 (in thousands): Fiscal Years Ending January 31, 2020 2021 $ 5,017 2022 6,498 2023 5,787 2024 5,346 2025 4,572 Thereafter 7,648 Total operating lease payments $ 34,868 Less imputed interest (5,314 ) Total operating lease liabilities $ 29,554 |
Stock-Based Compensation and _2
Stock-Based Compensation and Employee Benefit Plan (Tables) | 12 Months Ended |
Jan. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Share-based Compensation, Stock Options, Activity | The following table summarizes stock option activity and options outstanding and exercisable for the fiscal years ended, and as of, January 31, 2020 , February 1, 2019 and February 2, 2018 . Number Weighted- Weighted- Weighted-Average Grant date Fair Value Per Share Aggregate Intrinsic Value 1 (in thousands) Balance, February 3, 2017 2,578,167 $ 14.00 Granted — — Exercised — — Canceled, expired or forfeited (53,065 ) 14.00 Balance, February 2, 2018 2,525,102 $ 14.00 Granted — — Exercised (9,826 ) 14.00 Canceled, expired or forfeited (27,514 ) 14.00 Balance, February 1, 2019 2,487,762 $ 14.00 Granted — — Exercised (94,826 ) 14.00 Canceled, expired or forfeited (144,939 ) 14.00 Balance, January 31, 2020 2,247,997 $ 14.00 6.10 $ 6.08 $ 3,890 Options vested and expected to vest, January 31, 2020 2,244,835 $ 14.00 6.10 $ 6.08 $ 3,884 Options exercisable, January 31, 2020 1,646,650 $ 14.00 6.06 $ 6.11 $ 2,849 (1) The aggregate intrinsic values represent the total pre-tax intrinsic values based on the Company's closing share price of $15.73 as reported on the Nasdaq Global Select Market on January 31, 2020 , that would have been received by the option holders had all in-the-money options been exercised as of that date. |
Schedule of Nonvested Restricted Stock Units Activity | The following table summarizes activity for restricted stock and restricted stock units for the fiscal years ended, and as of, January 31, 2020 , February 1, 2019 and February 2, 2018 . Number of Shares Weighted- Average Grant Date Fair Value Per Share Weighted- Aggregate Intrinsic Value 1 (in thousands) Balance, February 3, 2017 2,242,486 $ 13.21 Granted 1,134,966 10.40 Vested (507,196 ) 13.62 Forfeited (550,697 ) 11.46 Balance, February 2, 2018 2,319,559 $ 12.16 Granted 2,274,508 9.78 Vested (793,723 ) 11.99 Forfeited (453,866 ) 10.69 Balance, February 1, 2019 3,346,478 $ 10.84 Granted 2,087,872 16.93 Vested (1,282,743 ) 11.10 Forfeited (1,088,990 ) 12.44 Balance, January 31, 2020 3,062,617 $ 14.32 1.25 $ 48,175 Restricted stock and restricted stock units expected to vest, January 31, 2020 2,909,217 $ 14.27 1.31 $ 45,762 (1) The aggregate intrinsic values represent the total pre-tax intrinsic values based on the Company's closing share price of $15.73 as reported on the Nasdaq Global Select Market on January 31, 2020 , that would have been received by the restricted stock and restricted stock unit holders had all restricted stock and restricted stock units been issued as of that date. |
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 January 31, 2020 , February 1, 2019 and February 2, 2018 . Fiscal Year Ended January 31, February 1, February 2, (in thousands) Cost of revenue $ 1,206 $ 780 $ 891 Research and development 4,280 4,133 3,261 Sales and marketing 1,694 2,652 735 General and administrative 12,368 11,805 8,903 Total stock-based compensation expense $ 19,548 $ 19,370 $ 13,790 |
Income and Other Taxes (Tables)
Income and Other Taxes (Tables) | 12 Months Ended |
Jan. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Effective Income Tax Rate Reconciliation | A reconciliation of the Company's benefit from income taxes to the statutory U.S. federal tax rate is as follows: Fiscal Year Ended January 31, 2020 February 1, 2019 February 2, 2018 U.S. federal statutory rate 21.0 % 21.0 % 33.7 % Impact of foreign operations 0.5 0.2 0.5 State income taxes, net of federal tax benefit 3.2 3.2 2.6 Research and development credits 6.5 4.4 2.1 Nondeductible/nontaxable items (0.6 ) (4.0 ) (2.1 ) U.S. Tax Reform 2.3 (9.4 ) 49.5 Stock-based compensation 5.4 (0.5 ) (0.6 ) Total 38.3 % 14.9 % 85.7 % The Company’s effective income tax rate for the fiscal years ended January 31, 2020 , February 1, 2019 and February 2, 2018 was as follows: Fiscal Year Ended January 31, 2020 February 1, 2019 February 2, 2018 Loss before income taxes $ (51,324 ) $ (45,954 ) $ (72,716 ) Income tax benefit $ (19,658 ) $ (6,853 ) $ (62,299 ) Effective tax rate 38.3 % 14.9 % 85.7 % |
Components of Income Tax Benefits | The benefit for income taxes consists of the following: Fiscal Year Ended January 31, 2020 February 1, 2019 February 2, 2018 (in thousands) Current: Federal $ (8,135 ) $ (527 ) $ (20,288 ) State/Local (895 ) (421 ) (886 ) Foreign 1,918 1,274 80 Current (7,112 ) 326 (21,094 ) Deferred: Federal (10,367 ) (5,930 ) (41,825 ) State/Local (931 ) (1,132 ) (444 ) Foreign (1,248 ) (117 ) 1,064 Deferred (12,546 ) (7,179 ) (41,205 ) Income tax benefit $ (19,658 ) $ (6,853 ) $ (62,299 ) |
Loss Before Provision For Income Taxes | Loss before provision for income taxes consists of the following: Fiscal Year Ended January 31, 2020 February 1, 2019 February 2, 2018 (in thousands) Domestic $ (55,800 ) $ (47,523 ) $ (77,390 ) Foreign 4,476 1,569 4,674 Loss before income taxes $ (51,324 ) $ (45,954 ) $ (72,716 ) |
Components of Deferred Tax Assets | The components of the Company's net deferred tax balances are as follows: January 31, 2020 February 1, 2019 (in thousands) Deferred tax assets: Deferred revenue $ 2,743 $ 2,163 Provision for doubtful accounts 1,056 1,245 Credit carryforwards 5,796 — Loss carryforwards 6,673 7,531 Stock-based and deferred compensation 9,249 8,468 Lease right-of-use asset 5,829 — Other 2,135 2,948 Deferred tax assets 33,481 22,355 Valuation allowance (4,613 ) (4,742 ) Deferred tax assets, net of valuation allowance 28,868 17,613 Deferred tax liabilities: Property and equipment (3,733 ) (1,842 ) Purchased intangible assets (44,444 ) (50,509 ) Operating and compensation related accruals (16,723 ) (18,614 ) Lease liability (4,589 ) — Other (1,067 ) (347 ) Deferred tax liabilities (70,556 ) (71,312 ) Net deferred tax liabilities $ (41,688 ) $ (53,699 ) |
Schedule of Unrecognized Tax Benefits | A reconciliation of the Company's beginning and ending amount of unrecognized tax benefits is as follows: Fiscal Year Ended January 31, 2020 February 1, 2019 February 2, 2018 (in thousands) Beginning unrecognized tax benefits $ 7,285 $ 763 $ 579 Increases related to tax positions of the current year 27 1,204 285 Increases related to tax position of prior years 13 5,589 — Reductions for tax positions of prior years (1,191 ) (271 ) (101 ) Ending unrecognized tax benefits $ 6,134 $ 7,285 $ 763 |
Selected Financial Information
Selected Financial Information (Tables) | 12 Months Ended |
Jan. 31, 2020 | |
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 January 31, 2020 and February 1, 2019 . Consolidated January 31, 2020 February 1, 2019 (in thousands) Accounts receivable, net: Gross accounts receivable $ 116,919 $ 147,504 Allowance for doubtful accounts (5,121 ) (6,160 ) Total $ 111,798 $ 141,344 Other current assets: Income tax receivable 10,040 6,853 Prepaid maintenance and support agreements 8,425 10,602 Prepaid other 8,984 10,149 Total $ 27,449 $ 27,604 Property and equipment, net Computer equipment $ 53,012 $ 67,468 Leasehold improvements 25,087 26,151 Other equipment 2,956 2,978 Total property and equipment 81,055 96,597 Accumulated depreciation and amortization $ (53,449 ) $ (60,619 ) Total $ 27,606 $ 35,978 Other noncurrent assets Prepaid maintenance agreements 1,260 1,351 Deferred tax asset 1,633 648 Deferred commission and fulfillment costs 74,151 73,868 Other 1,548 2,371 Total $ 78,592 $ 78,238 Accrued and other current liabilities Compensation $ 52,450 $ 48,242 Related party payable, net 3,209 15,634 Other 43,196 22,619 Total $ 98,855 $ 86,495 Other non-current liabilities Deferred tax liabilities $ 43,321 $ 54,347 Other 7,079 12,504 Total $ 50,400 $ 66,851 |
Net Revenue And Property, Plant, And Equipment | The following tables present net revenue and property, plant and equipment allocated between the United States and international locations. The Company defines international revenue as revenue contracted through non-U.S. entities. Fiscal Year Ended January 31, 2020 February 1, 2019 February 2, 2018 Net revenue United States $ 412,511 $ 403,614 $ 391,159 International 140,254 115,095 76,771 Total $ 552,765 $ 518,709 $ 467,930 January 31, 2020 February 1, 2019 Property and equipment, net United States $ 22,772 $ 29,684 International 4,834 6,294 Total $ 27,606 $ 35,978 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Jan. 31, 2020 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | As a result of the foregoing related party arrangements beginning in the third quarter of the fiscal year ended January 29, 2016, the Company has recorded the following related party balances in the Consolidated Statement of Financial Position as of January 31, 2020 and February 1, 2019 : January 31, 2020 February 1, 2019 (in thousands) Related party payable (in accrued and other current liabilities) $ 3,209 $ 15,634 Accounts receivable from customers under reseller agreements with Dell (in accounts receivable, net) $ 13,674 $ 21,760 Net operating loss tax sharing receivable under agreement with Dell (in other current assets) $ 10,040 $ 6,853 |
Unaudited Quarterly Results o_2
Unaudited Quarterly Results of Operations (Tables) | 12 Months Ended |
Jan. 31, 2020 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | The following ta ble presents selected unaudited Statements of Operations for each quarter of fiscal 2020 and fiscal 2019. The statement have been prepared on a basis consistent with our audited annual financial statements included in this Annual Report on Form 10-K and include, in the Company's opinion, all normal recurring adjustments necessary for the fair presentation of the financial information contained in those statements. The following quarterly financial data should be read in conjunction with the audited financial statements and the related notes included in this Annual Report on Form 10-K. Fiscal Year 2020 First Second Third Fourth Quarter Quarter Quarter Quarter Net revenue $ 132,842 $ 136,605 $ 141,332 $ 141,986 Gross margin $ 70,001 $ 73,010 $ 79,764 $ 77,194 Net loss $ (8,270 ) $ (10,260 ) $ (7,908 ) $ (5,228 ) Net loss per common share (basic and diluted) (1) $ (0.10 ) $ (0.13 ) $ (0.10 ) $ (0.06 ) Weighted-average common shares outstanding (basic and diluted) 80,467 80,674 80,518 80,591 (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. Fiscal Year 2019 First Second Third Fourth Quarter Quarter Quarter Quarter Net revenue $ 126,161 $ 128,778 $ 133,060 $ 130,710 Gross margin $ 65,631 $ 66,230 $ 70,927 $ 69,804 Net (loss) income $ (13,819 ) $ (9,769 ) $ (3,735 ) $ (11,778 ) Net (loss) income per common share (basic and diluted) (1) $ (0.17 ) $ (0.12 ) $ (0.05 ) $ (0.15 ) Weighted-average common shares outstanding (basic and diluted) 80,522 80,839 80,892 80,587 (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. |
Description of the Business a_2
Description of the Business and Basis of Presentation (Details) | 12 Months Ended |
Jan. 31, 2020segment | |
Class of Stock [Line Items] | |
Number of reportable segments | 1 |
IPO | Denali | |
Class of Stock [Line Items] | |
Percent of outstanding shares owned | 86.20% |
Percent of voting interests owned | 98.40% |
Significant Accounting Polici_4
Significant Accounting Policies - Narrative (Details) $ in Thousands | Apr. 27, 2016 | Jan. 31, 2020USD ($)segment | Feb. 01, 2019USD ($) | Feb. 02, 2018USD ($) | Nov. 01, 2019 | Aug. 02, 2019 | Feb. 02, 2019USD ($) |
Property and equipment, net | |||||||
Investment in money market funds | $ 100,500 | $ 90,700 | |||||
Allowance for doubtful accounts | 5,100 | 6,200 | |||||
Unbilled accounts receivable | 11,200 | 13,800 | |||||
Depreciation | 14,700 | 13,500 | $ 14,400 | ||||
Effects of exchange rate changes on monetary assets and liabilities denominated in foreign currencies | $ (270) | 1,818 | (3,256) | ||||
Number of reportable segments | segment | 1 | ||||||
Number of operating segments | segment | 1 | ||||||
Advertising expenses | $ 13,300 | $ 12,600 | $ 14,700 | ||||
Operating lease right-of-use assets, net | 23,463 | ||||||
Operating lease liabilities, non-current | $ 24,669 | ||||||
Minimum | |||||||
Property and equipment, net | |||||||
Useful life | 2 years | ||||||
Weighted-average remaining requisite period | 3 years | ||||||
Maximum | |||||||
Property and equipment, net | |||||||
Useful life | 5 years | ||||||
Weighted-average remaining requisite period | 4 years | ||||||
Leasehold Improvements | Maximum | |||||||
Property and equipment, net | |||||||
Useful life | 5 years | ||||||
Restricted Stock and Restricted Stock Units | |||||||
Property and equipment, net | |||||||
Vesting period | 4 years | 3 years | 3 years | 3 years | |||
Awards subject to performance conditions | 50.00% | 50.00% | 50.00% | ||||
Weighted-average remaining requisite period | 2 years 2 months 19 days | ||||||
ASU 2016-02 | |||||||
Property and equipment, net | |||||||
Operating lease right-of-use assets, net | $ 28,000 | ||||||
Operating lease liabilities, non-current | $ 31,800 | ||||||
Deferred commissions | |||||||
Property and equipment, net | |||||||
Amortization period | 6 years | 6 years | 7 years | ||||
Contract contract costs | $ 62,785 | $ 62,895 | $ 57,229 | ||||
Deferred fulfillment costs | |||||||
Property and equipment, net | |||||||
Amortization period | 4 years | ||||||
Contract contract costs | $ 11,366 | $ 10,973 | $ 10,163 |
Significant Accounting Polici_5
Significant Accounting Policies - Disaggregation of Revenue by Product Line (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2020 | Feb. 01, 2019 | Feb. 02, 2018 | |
Disaggregation of Revenue [Line Items] | |||
Net revenue | $ 552,765 | $ 518,709 | $ 467,930 |
Managed Security Solutions revenue | |||
Disaggregation of Revenue [Line Items] | |||
Net revenue | 419,489 | 396,130 | 365,768 |
Security and Risk Consulting revenue | |||
Disaggregation of Revenue [Line Items] | |||
Net revenue | $ 133,276 | $ 122,579 | $ 102,162 |
Loss Per Share (Details)
Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Jan. 31, 2020 | Nov. 01, 2019 | Aug. 02, 2019 | May 03, 2019 | Feb. 01, 2019 | Nov. 02, 2018 | Aug. 03, 2018 | May 04, 2018 | Jan. 31, 2020 | Feb. 01, 2019 | Feb. 02, 2018 | |
Numerator: | |||||||||||
Net loss | $ (5,228) | $ (7,908) | $ (10,260) | $ (8,270) | $ (11,778) | $ (3,735) | $ (9,769) | $ (13,819) | $ (31,666) | $ (39,101) | $ (10,417) |
Weighted-average number of shares outstanding: | |||||||||||
Weighted average number of shares outstanding, basic and diluted (in shares) | 80,591 | 80,518 | 80,674 | 80,467 | 80,587 | 80,892 | 80,839 | 80,522 | 80,563 | 80,710 | 80,280 |
Loss per common share: | |||||||||||
Loss per common share, basic and diluted (usd per share) | $ (0.06) | $ (0.10) | $ (0.13) | $ (0.10) | $ (0.15) | $ (0.05) | $ (0.12) | $ (0.17) | $ (0.39) | $ (0.48) | $ (0.13) |
Weighted-average anti-dilutive stock options, non-vested restricted stock and restricted stock units (in shares) | 5,826 | 5,966 | 5,096 |
Contract Balances and Contrac_3
Contract Balances and Contract Costs - Narrative (Details) | 12 Months Ended |
Jan. 31, 2020performance_obligation | |
Disaggregation of Revenue [Line Items] | |
Deferred revenue billed in advance, percent | 58.00% |
Deferred revenue billed monthly or quarterly, percent | 42.00% |
Number of elements performance obligation is comprised of | 2 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-02-01 | |
Disaggregation of Revenue [Line Items] | |
Performance obligation period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-02-01 | Managed Security Solutions revenue | |
Disaggregation of Revenue [Line Items] | |
Performance obligation period | 2 years |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-02-01 | Security and Risk Consulting revenue | |
Disaggregation of Revenue [Line Items] | |
Performance obligation period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-30 | |
Disaggregation of Revenue [Line Items] | |
Performance obligation period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-29 | |
Disaggregation of Revenue [Line Items] | |
Performance obligation period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-02-04 | |
Disaggregation of Revenue [Line Items] | |
Performance obligation period |
Contract Balances and Contrac_4
Contract Balances and Contract Costs - Deferred Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jan. 31, 2020 | Feb. 01, 2019 | |
Change in Contract with Customer, Liability [Roll Forward] | ||
Deferred revenue, Beginning of period | $ 173,929 | $ 152,645 |
Deferred revenue, upfront payments received and billings | 249,215 | 206,960 |
Deferred revenue, revenue recognition | (234,607) | (185,676) |
Deferred revenue, End of period | $ 188,537 | $ 173,929 |
Contract Balances and Contrac_5
Contract Balances and Contract Costs - Remaining Performance Obligation Total (Details) $ in Thousands | Jan. 31, 2020USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 311,224 |
Performance obligation - active | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | 285,833 |
Performance obligation - backlog | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 25,391 |
Contract Balances and Contrac_6
Contract Balances and Contract Costs - Remaining Performance Obligation (Details) $ in Thousands | Jan. 31, 2020USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 311,224 |
Performance obligation - active | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | 285,833 |
Performance obligation - backlog | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | 25,391 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-02-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | 170,262 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-02-01 | Performance obligation - active | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | 160,195 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-02-01 | Performance obligation - backlog | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | 10,067 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-30 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | 95,367 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-30 | Performance obligation - active | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | 85,660 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-30 | Performance obligation - backlog | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | 9,707 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-29 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | 33,991 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-29 | Performance obligation - active | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | 28,497 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-29 | Performance obligation - backlog | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | 5,494 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-02-04 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | 11,604 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-02-04 | Performance obligation - active | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | 11,481 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-02-04 | Performance obligation - backlog | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 123 |
Contract Balances and Contrac_7
Contract Balances and Contract Costs - Remaining Performance Obligation Time Period (Details) | Jan. 31, 2020 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-02-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligation period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-02-01 | Performance obligation - active | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligation period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-02-01 | Performance obligation - backlog | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligation period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-30 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligation period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-30 | Performance obligation - active | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligation period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-30 | Performance obligation - backlog | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligation period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-29 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligation period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-29 | Performance obligation - active | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligation period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-29 | Performance obligation - backlog | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligation period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-02-04 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligation period | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-02-04 | Performance obligation - active | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligation period | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-02-04 | Performance obligation - backlog | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligation period |
Contract Balances and Contrac_8
Contract Balances and Contract Costs - Deferred Commissions and Fulfillment Costs (Details) - USD ($) | 12 Months Ended | |||
Jan. 31, 2020 | Feb. 01, 2019 | Nov. 01, 2019 | Aug. 02, 2019 | |
Capitalized Contract Cost [Roll Forward] | ||||
Impact of increase in deferred commissions expense on a par share basis (usd per share) | $ 0.03 | |||
Impairment losses on deferred commissions and deferred fulfillment costs | $ 0 | |||
Deferred commissions | ||||
Capitalized Contract Cost [Roll Forward] | ||||
Beginning Balance | 62,895,000 | $ 57,229,000 | ||
Amount capitalized | 19,053,000 | 19,915,000 | ||
Amount expensed | (19,163,000) | (14,249,000) | ||
Ending Balance | $ 62,785,000 | 62,895,000 | ||
Deferred commissions amortization period | 6 years | 6 years | 7 years | |
Increase in deferred commissions expense | $ 3,500,000 | |||
Deferred fulfillment costs | ||||
Capitalized Contract Cost [Roll Forward] | ||||
Beginning Balance | 10,973,000 | 10,163,000 | ||
Amount capitalized | 5,921,000 | 5,920,000 | ||
Amount expensed | (5,528,000) | (5,110,000) | ||
Ending Balance | $ 11,366,000 | $ 10,973,000 | ||
Deferred commissions amortization period | 4 years |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands | Jan. 31, 2020 | Feb. 01, 2019 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 416,487 | $ 416,487 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) | 12 Months Ended | ||
Jan. 31, 2020 | Feb. 01, 2019 | Feb. 02, 2018 | |
Finite-Lived Intangible Assets [Line Items] | |||
Gross | $ 326,889,000 | $ 325,102,000 | |
Accumulated Amortization | (176,955,000) | (148,772,000) | |
Total | 149,934,000 | 176,330,000 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||
Gross | 357,007,000 | 355,220,000 | |
Accumulated Amortization | (176,955,000) | (148,772,000) | |
Net | 180,052,000 | 206,448,000 | |
Amortization expense | 28,200,000 | 27,700,000 | $ 27,700,000 |
Impairment charges | 0 | 0 | $ 0 |
Trade name | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Indefinite-lived intangible assets | 30,118,000 | 30,118,000 | |
Customer relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross | 189,518,000 | 189,518,000 | |
Accumulated Amortization | (91,246,000) | (77,152,000) | |
Total | 98,272,000 | 112,366,000 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||
Accumulated Amortization | (91,246,000) | (77,152,000) | |
Technology | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross | 137,371,000 | 135,584,000 | |
Accumulated Amortization | (85,709,000) | (71,620,000) | |
Total | 51,662,000 | 63,964,000 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||
Accumulated Amortization | $ (85,709,000) | $ (71,620,000) |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Estimated Future Amortization Expense (Details) - USD ($) $ in Thousands | Jan. 31, 2020 | Feb. 01, 2019 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2021 | $ 28,332 | |
2022 | 28,332 | |
2023 | 27,885 | |
2024 | 23,491 | |
2025 | 14,094 | |
Thereafter | 27,800 | |
Total | $ 149,934 | $ 176,330 |
Debt (Details)
Debt (Details) - Line of Credit - Revolving Credit Facility - USD ($) | Nov. 02, 2015 | Jan. 31, 2020 | Mar. 26, 2019 | Feb. 01, 2019 |
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 30,000,000 | $ 30,000,000 | ||
Debt instrument, term | 1 year | |||
Debt instrument, term, extension | 1 year | |||
Maximum amount outstanding during period | $ 30,000,000 | |||
Commitment fee percentage | 0.35% | |||
Additional borrowing capacity | $ 30,000,000 | |||
Line of credit, outstanding balance | $ 0 | $ 0 | ||
London Interbank Offered Rate (LIBOR) | ||||
Debt Instrument [Line Items] | ||||
Basis spread on variable rate | 1.30% |
Commitments and Contingencies -
Commitments and Contingencies - Future Minimum Lease Payments (Details) $ in Thousands | Jan. 31, 2020USD ($) |
Purchase Obligation, Fiscal Year Maturity [Abstract] | |
Purchase obligation, 2021 | $ 3,645 |
Purchase obligation, 2022 | 1,788 |
Purchase obligation, 2023 | 260 |
Purchase obligation, 2024 | 0 |
Purchase obligation, 2025 | 0 |
Purchase obligation, 2026 and beyond | 0 |
Purchase obligation, total | 5,693 |
Credit Facilities and Other, Fiscal Year Maturity [Abstract] | |
Credit Facilities and Other, 2021 | 0 |
Credit Facilities and Other, 2022 | 500 |
Credit Facilities and Other, 2023 | 0 |
Credit Facilities and Other, 2024 | 0 |
Credit Facilities and Other, 2025 | 0 |
Credit Facilities and Other, 2026 and beyond | 0 |
Credit Facilities and Other, total | 500 |
Total Obligations and Commitments, Fiscal Year Maturity [Abstract] | |
Total obligations and commitments, 2021 | 3,645 |
Total obligations and commitments, 2022 | 2,288 |
Total obligations and commitments, 2023 | 260 |
Total obligations and commitments, 2024 | 0 |
Total obligations and commitments, 2025 | 0 |
Total obligations and commitments, 2026 and beyond | 0 |
Total obligations and commitments, total | $ 6,193 |
Commitments and Contingencies_2
Commitments and Contingencies - Narrative (Details) | 12 Months Ended |
Jan. 31, 2020 | |
Maximum | |
Other Commitments [Line Items] | |
Income tax examination, period | 4 years |
Minimum | |
Other Commitments [Line Items] | |
Income tax examination, period | 3 years |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Jan. 31, 2020 | Feb. 01, 2019 | Feb. 02, 2018 | |
Lessee, Lease, Description [Line Items] | |||
Operating lease, impairment charge | $ 1.2 | ||
Variable lease cost | 1.2 | ||
Short-term lease cost | 1.2 | ||
Operating lease payments | $ 6.8 | ||
Operating lease cost | $ 5.5 | $ 4.7 | |
Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Remaining lease term | 1 month | ||
Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Remaining lease term | 7 years | ||
Leased Facilities | |||
Lessee, Lease, Description [Line Items] | |||
Operating lease costs | $ 7.9 | ||
Leased Equipment | |||
Lessee, Lease, Description [Line Items] | |||
Operating lease costs | $ 2.3 |
Leases - Weighted Average (Deta
Leases - Weighted Average (Details) | Jan. 31, 2020 |
Leases [Abstract] | |
Weighted-average remaining lease term | 5 years 9 months 18 days |
Weighted-average discount rate | 5.33% |
Leases - Maturities of Operatin
Leases - Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Millions | Jan. 31, 2020 | Feb. 01, 2019 |
Operating Leases, After Adoption of 842: | ||
2021 | $ 5,017 | |
2022 | 6,498 | |
2023 | 5,787 | |
2024 | 5,346 | |
2025 | 4,572 | |
Thereafter | 7,648 | |
Total operating lease payments | 34,868 | |
Less imputed interest | (5,314) | |
Total operating lease liabilities | $ 29,554 | |
Operating Leases, Before Adoption of 842: | ||
2020 | $ 5,237 | |
2021 | 4,446 | |
2022 | 6,190 | |
2023 | 5,440 | |
2024 | 4,936 | |
Thereafter | 11,825 | |
Total operating lease payments | $ 38,074 |
Stockholders' Equity - Narrativ
Stockholders' Equity - Narrative (Details) - USD ($) | 12 Months Ended | |||
Jan. 31, 2020 | Feb. 01, 2019 | Mar. 26, 2019 | Sep. 26, 2018 | |
Equity [Abstract] | ||||
Stock repurchase program, authorized amount | $ 15,000,000 | $ 15,000,000 | ||
Stock repurchased during the period (in shares) | 438,380 | |||
Average price of repurchased shares (usd per share) | $ 14.55 | |||
Aggregate cost of repurchased shares | $ 6,377,000 | $ 13,531,000 | ||
Stock repurchase program, remaining authorized repurchase amount | $ 10,100,000 |
Stock-Based Compensation and _3
Stock-Based Compensation and Employee Benefit Plan - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | Apr. 27, 2016 | Apr. 18, 2016 | Jan. 31, 2020 | Feb. 01, 2019 | Feb. 02, 2018 | Feb. 03, 2017 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock-based compensation expense | $ 19,548 | $ 19,370 | $ 13,790 | |||
Options, vested in period, fair value | 3,600 | 3,700 | 3,800 | |||
Proceeds from stock option exercises | $ 1,327 | 0 | 0 | |||
Number of shares outstanding (in shares) | 3,100,000 | |||||
Equity instruments other than options, outstanding, aggregate intrinsic value | $ 48,200 | |||||
Equity instruments other than options, vested in period, fair value | 14,200 | 9,400 | 6,900 | |||
Intrinsic value of shares that vested during period | 25,300 | 8,500 | 4,600 | |||
Tax benefit related to stock-based compensation expense | $ 4,600 | 4,700 | 3,300 | |||
Employer matching contribution, percent of match | 100.00% | |||||
Employer matching contribution, percent of employees' gross pay | 6.00% | |||||
Contribution plan expense | $ 10,800 | $ 10,200 | $ 10,700 | |||
Employee Stock Option | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Options outstanding, weighted-average contractual life (years) | 6 years 1 month 6 days | |||||
Granted (in shares) | 0 | 0 | 0 | |||
Stock-based compensation expense | $ 2,700 | $ 3,700 | $ 3,700 | |||
Compensation cost not yet recognized | $ 1,600 | |||||
Weighted-average remaining requisite period | 1 year 7 days | |||||
Options outstanding (in shares) | 2,247,997 | 2,487,762 | 2,525,102 | 2,578,167 | ||
Exercise of stock options (in shares) | 94,826 | 9,826 | 0 | |||
Employee Stock Option | Employee or Director | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Granted (in shares) | 0 | 0 | 0 | |||
Restricted Stock and Restricted Stock Units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Compensation cost not yet recognized | $ 25,000 | |||||
Weighted-average remaining requisite period | 2 years 2 months 19 days | |||||
Equity instruments other than options, granted, fair value (usd per share) | $ 14 | $ 16.93 | $ 9.78 | $ 10.40 | ||
Stock options vesting period | 4 years | 3 years | 3 years | 3 years | ||
Awards subject to performance conditions | 50.00% | 50.00% | 50.00% | |||
Number of shares outstanding (in shares) | 3,062,617 | 3,346,478 | 2,319,559 | 2,242,486 | ||
Equity instruments other than options, outstanding, aggregate intrinsic value | $ 48,175 | |||||
Performance based awards | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares outstanding (in shares) | 1,000,000 | |||||
Share-based compensation arrangement, plan modification, payout upon vesting, percent | 100.00% | |||||
Share-based compensation arrangement, plan modification, incremental costs | $ 2,600 | |||||
Share-based compensation arrangement, plan modification, incremental costs recognized | $ 400 | |||||
Service based awards | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares outstanding (in shares) | 2,100,000 | |||||
Restricted Stock | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock-based compensation expense | $ 16,800 | $ 15,200 | $ 9,800 | |||
Performance Cash Awards | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock options vesting period | 3 years | |||||
Long-term performance cash awards granted in period (in shares) | $ 6,900 | 15,700 | ||||
Compensation expense | $ 7,300 | $ 6,600 | ||||
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) | 12,500,000 | |||||
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% | |||||
Long-Term Incentive Plan 2016 | Common Stock, Class A | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of additional shares authorized (in shares) | 4,000,000 | |||||
Number of shares available for future grant (in shares) | 4,500,000 | |||||
2013 Plan | Employee Stock Option | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock-based compensation expense | $ 500 | $ 300 | ||||
2013 Plan | Employee Stock Option, Time Based | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Options outstanding (in shares) | 32,000 | 32,000 | ||||
2013 Plan | Employee Stock Option, Performance Based | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Compensation cost not yet recognized | $ 2,400 | |||||
Options outstanding (in shares) | 400,001 | 310,001 | ||||
Exercise of stock options (in shares) | 90,000 | |||||
Options exercised, intrinsic value | $ 3,800 | |||||
Proceeds from stock option exercises | 1,300 | |||||
Tax benefit realized from stock options exercised | $ 900 |
Stock-Based Compensation and _4
Stock-Based Compensation and Employee Benefit Plan - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Jan. 31, 2020 | Feb. 01, 2019 | Feb. 02, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | |||
Price per share (usd per share) | $ 15.73 | ||
Employee Stock Option | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Number of options outstanding, beginning (in shares) | 2,487,762 | 2,525,102 | 2,578,167 |
Granted (in shares) | 0 | 0 | 0 |
Exercised (in shares) | (94,826) | (9,826) | 0 |
Canceled, expired or forfeited (in shares) | (144,939) | (27,514) | (53,065) |
Number of options outstanding, ending (in shares) | 2,247,997 | 2,487,762 | 2,525,102 |
Number of options expected to vest (in shares) | 2,244,835 | ||
Number of options exercisable (in shares) | 1,646,650 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | |||
Weighted-average exercise price, beginning (usd per share) | $ 14 | $ 14 | $ 14 |
Granted (usd per share) | 0 | 0 | 0 |
Exercised (usd per share) | 14 | 14 | 0 |
Canceled, expired or forfeited (usd per share) | 14 | 14 | 14 |
Weighted-average exercise price, ending (usd per share) | 14 | $ 14 | $ 14 |
Weighted-average exercise price, options expected to vest (usd per share) | 14 | ||
Options exercisable, weighted-average exercise price (usd per share) | $ 14 | ||
Options outstanding, weighted-average contractual life (years) | 6 years 1 month 6 days | ||
Options expected to vest, weighted-average contractual life (years) | 6 years 1 month 6 days | ||
Options exercisable, weighted-average contractual life (years) | 6 years 21 days | ||
Options outstanding, weighted average grant date fair value (usd per share) | $ 6.08 | ||
Options expected to vest, weighted average grant date fair value (usd per share) | 6.08 | ||
Options exercisable, weighted average grant date fair value (usd per share) | $ 6.11 | ||
Options outstanding, aggregate intrinsic value | $ 3,890 | ||
Options expected to vest, aggregate intrinsic value | 3,884 | ||
Options exercisable, aggregate intrinsic value | $ 2,849 |
Stock-Based Compensation and _5
Stock-Based Compensation and Employee Benefit Plan - Restricted Stock Awards (Details) - USD ($) $ / shares in Units, $ in Thousands | Apr. 27, 2016 | Jan. 31, 2020 | Feb. 01, 2019 | Feb. 02, 2018 |
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, ending (in shares) | 3,100,000 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | ||||
Equity instruments other than options, outstanding, aggregate intrinsic value | $ 48,200 | |||
Price per share (usd per share) | $ 15.73 | |||
Restricted Stock and Restricted Stock Units | ||||
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) | 3,346,478 | 2,319,559 | 2,242,486 | |
Granted (in shares) | 2,087,872 | 2,274,508 | 1,134,966 | |
Vested (in shares) | (1,282,743) | (793,723) | (507,196) | |
Forfeited (in shares) | (1,088,990) | (453,866) | (550,697) | |
Number of shares outstanding and unvested, ending (in shares) | 3,062,617 | 3,346,478 | 2,319,559 | |
Number of shares expected to vest (in shares) | 2,909,217 | |||
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) | $ 10.84 | $ 12.16 | $ 13.21 | |
Granted (usd per share) | $ 14 | 16.93 | 9.78 | 10.40 |
Vested (usd per share) | 11.10 | 11.99 | 13.62 | |
Forfeited (usd per share) | 12.44 | 10.69 | 11.46 | |
Weighted-average exercise price, ending (usd per share) | 14.32 | $ 10.84 | $ 12.16 | |
Number of shares expected to vest (usd per shares) | $ 14.27 | |||
Equity instruments other than options, outstanding, weighted-average contractual life (years) | 1 year 3 months | |||
Equity instruments other than options, expected to vest, weighted-average contractual life (years) | 1 year 3 months 21 days | |||
Equity instruments other than options, outstanding, aggregate intrinsic value | $ 48,175 | |||
Equity instruments other than options, expected to vest, aggregate intrinsic value | $ 45,762 |
Stock-Based Compensation and _6
Stock-Based Compensation and Employee Benefit Plan - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2020 | Feb. 01, 2019 | Feb. 02, 2018 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Total stock-based compensation expense | $ 19,548 | $ 19,370 | $ 13,790 |
Cost of revenue | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Total stock-based compensation expense | 1,206 | 780 | 891 |
Research and development | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Total stock-based compensation expense | 4,280 | 4,133 | 3,261 |
Sales and marketing | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Total stock-based compensation expense | 1,694 | 2,652 | 735 |
General and administrative | |||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Total stock-based compensation expense | $ 12,368 | $ 11,805 | $ 8,903 |
Income and Other Taxes - Effect
Income and Other Taxes - Effective Tax Rate (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2020 | Feb. 01, 2019 | Feb. 02, 2018 | |
Income Tax Disclosure [Abstract] | |||
Loss before income taxes | $ (51,324) | $ (45,954) | $ (72,716) |
Income tax benefit | $ (19,658) | $ (6,853) | $ (62,299) |
U.S. federal statutory rate | 21.00% | 21.00% | 33.70% |
Impact of foreign operations | 0.50% | 0.20% | 0.50% |
State income taxes, net of federal tax benefit | 3.20% | 3.20% | 2.60% |
Research and development credits | 6.50% | 4.40% | 2.10% |
Nondeductible/nontaxable items | (0.60%) | (4.00%) | (2.10%) |
U.S. Tax Reform | 2.30% | (9.40%) | 49.50% |
Stock-based compensation | 5.40% | (0.50%) | (0.60%) |
Total | 38.30% | 14.90% | 85.70% |
Income and Other Taxes - Benefi
Income and Other Taxes - Benefit for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2020 | Feb. 01, 2019 | Feb. 02, 2018 | |
Current: | |||
Federal | $ (8,135) | $ (527) | $ (20,288) |
State/Local | (895) | (421) | (886) |
Foreign | 1,918 | 1,274 | 80 |
Current | (7,112) | 326 | (21,094) |
Deferred: | |||
Federal | (10,367) | (5,930) | (41,825) |
State/Local | (931) | (1,132) | (444) |
Foreign | (1,248) | (117) | 1,064 |
Deferred | (12,546) | (7,179) | (41,205) |
Income tax benefit | $ (19,658) | $ (6,853) | $ (62,299) |
Income and Other Taxes - Loss B
Income and Other Taxes - Loss Before Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2020 | Feb. 01, 2019 | Feb. 02, 2018 | |
Income Tax Disclosure [Abstract] | |||
Domestic | $ (55,800) | $ (47,523) | $ (77,390) |
Foreign | 4,476 | 1,569 | 4,674 |
Loss before income taxes | $ (51,324) | $ (45,954) | $ (72,716) |
Income and Other Taxes - Deferr
Income and Other Taxes - Deferred Taxes (Details) - USD ($) $ in Thousands | Jan. 31, 2020 | Feb. 01, 2019 |
Deferred tax assets: | ||
Deferred revenue | $ 2,743 | $ 2,163 |
Provision for doubtful accounts | 1,056 | 1,245 |
Credit carryforwards | 5,796 | 0 |
Loss carryforwards | 6,673 | 7,531 |
Stock-based and deferred compensation | 9,249 | 8,468 |
Lease right-of-use asset | 5,829 | |
Other | 2,135 | 2,948 |
Deferred tax assets | 33,481 | 22,355 |
Valuation allowance | (4,613) | (4,742) |
Deferred tax assets, net of valuation allowance | 28,868 | 17,613 |
Deferred tax liabilities: | ||
Property and equipment | (3,733) | (1,842) |
Purchased intangible assets | (44,444) | (50,509) |
Operating and compensation related accruals | (16,723) | (18,614) |
Lease liability | (4,589) | |
Other | (1,067) | (347) |
Deferred tax liabilities | (70,556) | (71,312) |
Net deferred tax liabilities | $ (41,688) | $ (53,699) |
Income and Other Taxes Narrativ
Income and Other Taxes Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Jan. 31, 2020 | Nov. 01, 2019 | Aug. 02, 2019 | May 03, 2019 | Feb. 01, 2019 | Nov. 02, 2018 | Aug. 03, 2018 | May 04, 2018 | Jan. 31, 2020 | Feb. 01, 2019 | Feb. 02, 2018 | |
Operating Loss Carryforwards [Line Items] | |||||||||||
Loss carryforwards | $ 4,600 | $ 4,700 | $ 4,600 | $ 4,700 | |||||||
Loss before income taxes | 51,324 | 45,954 | $ 72,716 | ||||||||
Income tax benefit | 19,658 | 6,853 | 62,299 | ||||||||
Net loss | 5,228 | $ 7,908 | $ 10,260 | $ 8,270 | 11,778 | $ 3,735 | $ 9,769 | $ 13,819 | 31,666 | 39,101 | 10,417 |
Withholding taxes due to unremitted foreign earnings | 300 | 300 | 300 | 300 | |||||||
Unrecognized tax benefits that would impact effective tax rate | 6,600 | 7,500 | 6,600 | 7,500 | 800 | ||||||
Unrecognized tax benefits, income tax penalties and interest accrued | $ 500 | $ 300 | 500 | 300 | 0 | ||||||
Unrecognized tax benefits, income tax penalties and interest | 200 | $ 200 | $ 0 | ||||||||
Pro Forma | |||||||||||
Operating Loss Carryforwards [Line Items] | |||||||||||
Loss before income taxes | 51,300 | ||||||||||
Income tax benefit | 6,000 | ||||||||||
Net loss | $ 45,300 |
Income and Other Taxes - Unreco
Income and Other Taxes - Unrecognized Tax Benefit (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2020 | Feb. 01, 2019 | Feb. 02, 2018 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Unrecognized tax benefit, Balance at beginning of year | $ 7,285 | $ 763 | $ 579 |
Increases related to tax positions of the current year | 27 | 1,204 | 285 |
Increases related to tax position of prior years | 13 | 5,589 | 0 |
Reductions for tax positions of prior years | (1,191) | (271) | (101) |
Unrecognized tax benefit, Balance at end of year | $ 6,134 | $ 7,285 | $ 763 |
Selected Financial Informatio_2
Selected Financial Information (Details) - USD ($) $ in Thousands | Jan. 31, 2020 | Feb. 01, 2019 |
Accounts receivable, net: | ||
Gross accounts receivable | $ 116,919 | $ 147,504 |
Allowance for doubtful accounts | (5,121) | (6,160) |
Total | 111,798 | 141,344 |
Other current assets: | ||
Income tax receivable | 10,040 | 6,853 |
Prepaid maintenance and support agreements | 8,425 | 10,602 |
Prepaid other | 8,984 | 10,149 |
Total | 27,449 | 27,604 |
Property and equipment, net | ||
Property and equipment, net | 81,055 | 96,597 |
Accumulated depreciation and amortization | (53,449) | (60,619) |
Total | 27,606 | 35,978 |
Other noncurrent assets | ||
Prepaid maintenance agreements | 1,260 | 1,351 |
Deferred tax asset | 1,633 | 648 |
Deferred commission and fulfillment costs | 74,151 | 73,868 |
Other | 1,548 | 2,371 |
Total | 78,592 | 78,238 |
Accrued and other current liabilities | ||
Compensation | 52,450 | 48,242 |
Related party payable, net | 3,209 | 15,634 |
Other | 43,196 | 22,619 |
Total | 98,855 | 86,495 |
Other non-current liabilities | ||
Deferred tax liabilities | 43,321 | 54,347 |
Other | 7,079 | 12,504 |
Total | 50,400 | 66,851 |
Computer equipment | ||
Property and equipment, net | ||
Property and equipment, net | 53,012 | 67,468 |
Leasehold improvements | ||
Property and equipment, net | ||
Property and equipment, net | 25,087 | 26,151 |
Other equipment | ||
Property and equipment, net | ||
Property and equipment, net | $ 2,956 | $ 2,978 |
Selected Financial Informatio_3
Selected Financial Information - Additional (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Jan. 31, 2020 | Nov. 01, 2019 | Aug. 02, 2019 | May 03, 2019 | Feb. 01, 2019 | Nov. 02, 2018 | Aug. 03, 2018 | May 04, 2018 | Jan. 31, 2020 | Feb. 01, 2019 | Feb. 02, 2018 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net revenue | $ 141,986 | $ 141,332 | $ 136,605 | $ 132,842 | $ 130,710 | $ 133,060 | $ 128,778 | $ 126,161 | |||
Net revenue | $ 552,765 | $ 518,709 | $ 467,930 | ||||||||
Property and equipment, net | 27,606 | 35,978 | 27,606 | 35,978 | |||||||
United States | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net revenue | 412,511 | 403,614 | 391,159 | ||||||||
Property and equipment, net | 22,772 | 29,684 | 22,772 | 29,684 | |||||||
Foreign Countries | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net revenue | 140,254 | 115,095 | $ 76,771 | ||||||||
Property and equipment, net | $ 4,834 | $ 6,294 | $ 4,834 | $ 6,294 | |||||||
Property, Plant and Equipment | ROMANIA | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Concentration risk, percentage | 14.00% | 13.00% |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2020 | Feb. 01, 2019 | Feb. 02, 2018 | |
Related Party Transaction [Line Items] | |||
Charged under shared services agreement | $ 99,505 | $ 91,898 | $ 92,726 |
Purchases of computer equipment from Dell | 12,590 | 10,200 | 13,819 |
Revenues | 552,765 | 518,709 | 467,930 |
Dell Inc. | |||
Related Party Transaction [Line Items] | |||
Performance bonds, outstanding | 1,800 | ||
Dell Inc. | Principal Owner | |||
Related Party Transaction [Line Items] | |||
Charged under shared services agreement | 9,100 | 3,700 | 4,900 |
Dell Inc. | Principal Owner | Solutions Purchases | |||
Related Party Transaction [Line Items] | |||
Revenues | 27,200 | 16,600 | 21,100 |
Dell Inc. | Principal Owner | Contracts Not Yet Transferred | |||
Related Party Transaction [Line Items] | |||
Revenues | 57,800 | 59,000 | 44,700 |
Dell Inc. | Chief Executive Officer | |||
Related Party Transaction [Line Items] | |||
Revenues | 400 | 500 | 400 |
Dell And EMC | Principal Owner | |||
Related Party Transaction [Line Items] | |||
Purchases of computer equipment from Dell | 3,100 | 2,700 | 2,600 |
EMC and VMware | Subsidiary of Common Parent | |||
Related Party Transaction [Line Items] | |||
Purchase of annual maintenance services | 3,400 | 1,200 | 1,300 |
Carbon Black Inc. | Subsidiary of Common Parent | Solutions Purchases | |||
Related Party Transaction [Line Items] | |||
Purchase of solutions from Carbon Black | 2,200 | ||
Total liabilities | 300 | ||
RSA Security LLC And Pivotal Software, Inc. | Subsidiary of Common Parent | |||
Related Party Transaction [Line Items] | |||
Purchase of annual maintenance services | 100 | 700 | 100 |
Revenues | $ 100 | $ 300 | $ 200 |
Related Party Transactions - Ba
Related Party Transactions - Balances in Condensed Consolidated Statements of Financial Position (Details) - USD ($) $ in Thousands | Jan. 31, 2020 | Feb. 01, 2019 |
Related Party Transaction [Line Items] | ||
Related party payable (in accrued and other current liabilities) | $ 3,209 | $ 15,634 |
Net operating loss tax sharing receivable under agreement with Dell (in other current assets) | 27,449 | 27,604 |
Dell Inc. | Principal Owner | ||
Related Party Transaction [Line Items] | ||
Accounts receivable from customers under reseller agreements with Dell (in accounts receivable, net) | 13,674 | 21,760 |
Net operating loss tax sharing receivable under agreement with Dell (in other current assets) | $ 10,040 | $ 6,853 |
Unaudited Quarterly Results o_3
Unaudited Quarterly Results of Operations (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Jan. 31, 2020 | Nov. 01, 2019 | Aug. 02, 2019 | May 03, 2019 | Feb. 01, 2019 | Nov. 02, 2018 | Aug. 03, 2018 | May 04, 2018 | Jan. 31, 2020 | Feb. 01, 2019 | Feb. 02, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Net revenue | $ 141,986 | $ 141,332 | $ 136,605 | $ 132,842 | $ 130,710 | $ 133,060 | $ 128,778 | $ 126,161 | |||
Gross margin | 77,194 | 79,764 | 73,010 | 70,001 | 69,804 | 70,927 | 66,230 | 65,631 | $ 299,969 | $ 272,592 | $ 242,846 |
Net (loss) income | $ (5,228) | $ (7,908) | $ (10,260) | $ (8,270) | $ (11,778) | $ (3,735) | $ (9,769) | $ (13,819) | $ (31,666) | $ (39,101) | $ (10,417) |
Net (loss) income per common share, basic and diluted (usd per share) | $ (0.06) | $ (0.10) | $ (0.13) | $ (0.10) | $ (0.15) | $ (0.05) | $ (0.12) | $ (0.17) | $ (0.39) | $ (0.48) | $ (0.13) |
Weighted average common shares outstanding, basic and diluted (in shares) | 80,591 | 80,518 | 80,674 | 80,467 | 80,587 | 80,892 | 80,839 | 80,522 | 80,563 | 80,710 | 80,280 |
Subsequent Events (Details)
Subsequent Events (Details) - Line of Credit - Revolving Credit Facility - USD ($) | Mar. 26, 2020 | Mar. 25, 2020 | Jan. 31, 2020 | Mar. 26, 2019 | Nov. 02, 2015 |
Subsequent Event [Line Items] | |||||
Maximum borrowing capacity | $ 30,000,000 | $ 30,000,000 | |||
London Interbank Offered Rate (LIBOR) | |||||
Subsequent Event [Line Items] | |||||
Basis spread on variable rate | 1.30% | ||||
London Interbank Offered Rate (LIBOR) | Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Basis spread on variable rate | 1.30% | 1.50% |
Valuation and Qualifying Acco_2
Valuation and Qualifying Accounts (Details) - Allowance for Doubtful Accounts - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 31, 2020 | Feb. 01, 2019 | Feb. 02, 2018 | |
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at beginning of period | $ 6,160 | $ 8,246 | $ 6,132 |
Charged to income statement | 3,099 | 2,356 | 3,947 |
Charged to allowance | (4,138) | (4,442) | (1,833) |
Balance at end of period | $ 5,121 | $ 6,160 | $ 8,246 |