Cover Page
Cover Page - shares | 3 Months Ended | |
May 01, 2020 | Jun. 03, 2020 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | May 1, 2020 | |
Document Transition Report | false | |
Entity File Number | 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 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 Central Index Key | 0001468666 | |
Current Fiscal Year End Date | --01-29 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Common Stock, Class A | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 12,139,999 | |
Common Stock, Class B | ||
Entity Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 70,000,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Financial Position (Unaudited) - USD ($) $ in Thousands | May 01, 2020 | Jan. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 155,990 | $ 181,838 |
Accounts receivable, net of allowances of $5,247 and $5,120, respectively | 116,791 | 111,798 |
Inventories, net | 812 | 746 |
Other current assets | 27,404 | 27,449 |
Total current assets | 300,997 | 321,831 |
Property and equipment, net | 24,541 | 27,606 |
Operating lease right-of-use assets, net | 22,207 | 23,463 |
Goodwill | 416,487 | 416,487 |
Intangible assets, net | 173,069 | 180,052 |
Other non-current assets | 76,628 | 78,592 |
Total assets | 1,013,929 | 1,048,031 |
Current liabilities: | ||
Accounts payable | 26,629 | 18,690 |
Accrued and other current liabilities | 64,321 | 98,855 |
Short-term deferred revenue | 175,671 | 175,847 |
Total current liabilities | 266,621 | 293,392 |
Long-term deferred revenue | 14,260 | 12,690 |
Operating lease liabilities, non-current | 23,246 | 24,669 |
Other non-current liabilities | 50,284 | 50,400 |
Total liabilities | 354,411 | 381,151 |
Commitments and contingencies (Note 6) | ||
Stockholders' equity: | ||
Preferred stock - $0.01 par value: 200,000 shares authorized; 0 shares issued | 0 | 0 |
Additional paid in capital | 898,370 | 896,983 |
Accumulated deficit | (215,465) | (207,929) |
Accumulated other comprehensive (loss) income | (4,312) | (3,090) |
Treasury stock, at cost - 1,257 shares | (19,896) | (19,896) |
Total stockholders' equity | 659,518 | 666,880 |
Total liabilities and stockholders' equity | 1,013,929 | 1,048,031 |
Common Stock, Class A | ||
Stockholders' equity: | ||
Common stock | 121 | 112 |
Common Stock, Class B | ||
Stockholders' equity: | ||
Common stock | $ 700 | $ 700 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Financial Position (Unaudited) (Parenthetical) - USD ($) $ in Thousands | May 01, 2020 | Jan. 31, 2020 |
Accounts receivable, allowance for doubtful accounts | $ 5,247 | $ 5,120 |
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 |
Treasury stock, shares (in shares) | 1,257,000 | 1,257,000 |
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) | 12,120,000 | 11,206,000 |
Common stock, shares outstanding (in shares) | 12,120,000 | 11,206,000 |
Common Stock, Class B | ||
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 70,000,000 | 70,000,000 |
Common stock, shares outstanding (in shares) | 70,000,000 | 70,000,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
May 01, 2020 | May 03, 2019 | |
Income Statement [Abstract] | ||
Net revenue | $ 141,181 | $ 132,842 |
Cost of revenue | 62,909 | 62,841 |
Gross margin | 78,272 | 70,001 |
Research and development | 24,073 | 22,642 |
Sales and marketing | 37,452 | 38,193 |
General and administrative | 27,516 | 23,638 |
Total operating expenses | 89,041 | 84,473 |
Operating loss | (10,769) | (14,472) |
Interest and other, net | 993 | 268 |
Loss before income taxes | (9,776) | (14,204) |
Income tax benefit | (2,240) | (5,934) |
Net loss | $ (7,536) | $ (8,270) |
Loss per common share (basic and diluted) (usd per share) | $ (0.09) | $ (0.10) |
Weighted-average common shares outstanding (basic and diluted) (in shares) | 80,938 | 80,467 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
May 01, 2020 | May 03, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (7,536) | $ (8,270) |
Foreign currency translation adjustments, net of tax | (1,222) | (233) |
Comprehensive loss | $ (8,758) | $ (8,503) |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
May 01, 2020 | May 03, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (7,536) | $ (8,270) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 10,486 | 10,365 |
Stock-based compensation expense | 5,887 | 4,916 |
Effects of exchange rate changes on monetary assets and liabilities denominated in foreign currencies | (856) | 70 |
Income tax benefit | (2,240) | (5,934) |
Provision for doubtful accounts | 909 | 779 |
Changes in assets and liabilities: | ||
Accounts receivable | (5,987) | 5,221 |
Net transactions with parent | 2,494 | 5,850 |
Inventories | (66) | (164) |
Other assets | 5,267 | 2,747 |
Accounts payable | 8,495 | 8,965 |
Deferred revenue | 1,291 | 3,264 |
Accrued and other liabilities | (38,481) | (30,834) |
Net cash used by operating activities | (20,337) | (3,025) |
Cash flows from investing activities: | ||
Capital expenditures | (1,020) | (7,016) |
Net cash used in investing activities | (1,020) | (7,016) |
Cash flows from financing activities: | ||
Taxes paid on vested restricted shares | (4,491) | (7,465) |
Purchases of stock for treasury | 0 | (910) |
Net cash used in financing activities | (4,491) | (8,375) |
Net decrease in cash and cash equivalents | (25,848) | (18,416) |
Cash and cash equivalents at beginning of the period | 181,838 | 129,592 |
Cash and cash equivalents at end of the period | $ 155,990 | $ 111,176 |
Condensed Consolidated Statem_6
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - 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 |
Balances, at beginning of the period (in shares) at Feb. 01, 2019 | 11,016,000 | 70,000,000 | |||||
Balances, at beginning of the period at Feb. 01, 2019 | $ 692,707 | $ 110 | $ 700 | $ 884,567 | $ (176,263) | $ (2,884) | $ (13,523) |
Statement of Shareholders' Equity | |||||||
Net loss | (8,270) | (8,270) | |||||
Other comprehensive loss | (233) | (233) | |||||
Vesting of restricted stock units (in shares) | 817,000 | ||||||
Vesting of restricted stock units | 0 | $ 8 | (8) | ||||
Grant of restricted stock awards (in shares) | 122,000 | ||||||
Grant of restricted stock awards | 0 | $ 2 | (2) | ||||
Common stock withheld as payment for withholding taxes upon the vesting of restricted shares (in shares) | (396,000) | ||||||
Common stock withheld as payment for withholding taxes upon the vesting of restricted shares | (7,465) | $ (4) | (7,461) | ||||
Stock-based compensation | 4,916 | 4,916 | |||||
Shares repurchased (in shares) | (38,000) | ||||||
Shares repurchased | (910) | (910) | |||||
Balances, at end of the period (in shares) at May. 03, 2019 | 11,521,000 | 70,000,000 | |||||
Balances, at end of the period at May. 03, 2019 | 680,745 | $ 116 | $ 700 | 882,012 | (184,533) | (3,117) | (14,433) |
Balances, at beginning of the period (in shares) at Jan. 31, 2020 | 11,206,000 | 70,000,000 | |||||
Balances, at beginning of the period at Jan. 31, 2020 | 666,880 | $ 112 | $ 700 | 896,983 | (207,929) | (3,090) | (19,896) |
Statement of Shareholders' Equity | |||||||
Net loss | (7,536) | (7,536) | |||||
Other comprehensive loss | (1,222) | (1,222) | |||||
Vesting of restricted stock units (in shares) | 842,000 | ||||||
Vesting of restricted stock units | 0 | $ 8 | (8) | ||||
Grant of restricted stock awards (in shares) | 455,000 | ||||||
Grant of restricted stock awards | 0 | $ 5 | (5) | ||||
Common stock withheld as payment for withholding taxes upon the vesting of restricted shares (in shares) | (383,000) | ||||||
Common stock withheld as payment for withholding taxes upon the vesting of restricted shares | (4,491) | $ (4) | (4,487) | ||||
Stock-based compensation | $ 5,887 | 5,887 | |||||
Shares repurchased (in shares) | 0 | ||||||
Shares repurchased | $ 0 | ||||||
Balances, at end of the period (in shares) at May. 01, 2020 | 12,120,000 | 70,000,000 | |||||
Balances, at end of the period at May. 01, 2020 | $ 659,518 | $ 121 | $ 700 | $ 898,370 | $ (215,465) | $ (4,312) | $ (19,896) |
Description of the Business and
Description of the Business and Basis of Presentation | 3 Months Ended |
May 01, 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"). 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 outstanding shares of the Company's outstanding Class B common stock, which as of May 1, 2020 represented approximately 85.2% of the Company's total outstanding shares of common stock and approximately 98.3% 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 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 condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of financial statements in accordance with GAAP requires management to make assumptions and estimations that affect the amounts reported in the Company's financial statements and notes. The inputs into certain of the Company's assumptions and estimations considered the economic implications of the coronavirus disease 2019 ("COVID-19") pandemic on the Company's critical and significant accounting estimates. The condensed consolidated financial statements include assets, liabilities, revenue and expenses of all majority-owned subsidiaries. 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 is charged in accordance with a shared services agreement that went into effect on August 1, 2015. For more information regarding the charges for these services and related party transactions, see " Note 11 —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 10 —Income and Other Taxes" for more information. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and the requirements of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statement presentation. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. In the opinion of management, all adjustments consisting of normal recurring accruals and disclosures considered necessary for a fair statement have been included. All intercompany accounts and transactions have been eliminated in consolidation. The accompanying condensed consolidated financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto for the year ended January 31, 2020 included in Part II, Item 8 of the Company's Annual Report on Form 10-K filed with the SEC on March 27, 2020 (the "Annual Report"). Fiscal Year The Company’s fiscal year is the 52- or 53-week period ending on the Friday closest to January 31. The Company refers to the fiscal year ending January 29, 2021 and the fiscal year ended January 31, 2020 as fiscal 2021 and fiscal 2020 , respectively. Both fiscal 2021 and fiscal 2020 have 52 weeks, and each quarter has 13 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 Condensed 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 Condensed Consolidated Statements of Financial Position, estimates are used in determining the valuation and recoverability of assets, such as accounts receivables, inventories, fixed assets, goodwill and other identifiable intangible assets, and estimates are used in determining the reported amounts of liabilities, such as taxes payable and the impact of contingencies, all of which also impact the Condensed Consolidated Statements of Operations. Actual results could differ from these estimates due to risks and uncertainties, including uncertainty in the current economic environment due to the COVID-19 pandemic. The Company considered the potential impact of the COVID-19 pandemic on its estimates and assumptions and determined there was not a material impact to the Company's condensed consolidated financial statements as of and for the three months ended May 1, 2020 . As the COVID-19 pandemic continues to develop, many of the Company's estimates could require increased judgment and be subject to a higher degree of variability and volatility. As events continue to evolve, the Company's estimates may change materially in future periods. Recently Adopted Accounting Pronouncements Intangibles - Goodwill and Other - Internal-Use Software —The Company adopted Accounting Standard Update ("ASU") 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," effective February 1, 2020. ASU 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 adoption of the standard had no material impact on the condensed consolidated financial statements. Intangibles - Goodwill and Other —The Company adopted ASU No. 2017-04, "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment," effective February 1, 2020. ASU 2017-04 eliminates Step 2 of the goodwill impairment test, which required the Company to determine the implied fair value of goodwill by allocating the reporting unit's fair value to each of its assets and liabilities as if the reporting unit was acquired in a business acquisition. 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 adoption of the standard had no impact on the condensed consolidated financial statements. Financial Instruments - Credit Losses —The Company adopted ASU No. 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," effective February 1, 2020. 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 adoption of the standard had no material impact on the condensed consolidated financial statements. Under the new standard, the Company assesses its allowance for credit losses on trade receivables by taking into consideration forecasts of future economic conditions, information about past events, such as its historical trend of write-offs, and customer-specific circumstances, such as bankruptcies and disputes. The allowance for credit losses on trade receivables is recorded in operating expenses in the Company's condensed consolidated statement of operations. Summary of Significant Accounting Policies There have been no significant changes to the Company’s significant accounting policies as of and for the three months ended May 1, 2020 , as compared to the significant accounting policies described in the Annual Report. 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 allocation of 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. |
Loss Per Share
Loss Per Share | 3 Months Ended |
May 01, 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 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): Three Months Ended May 1, 2020 May 3, 2019 Numerator: Net loss $ (7,536 ) $ (8,270 ) Denominator: Weighted-average number of shares outstanding: Basic and Diluted 80,938 80,467 Loss per common share: Basic and Diluted $ (0.09 ) $ (0.10 ) Weighted-average anti-dilutive stock options, non-vested restricted stock and restricted stock units 5,294 5,456 |
Contract Balances and Contract
Contract Balances and Contract Costs | 3 Months Ended |
May 01, 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, each arrangement is typically structured as a separate performance obligation over the contract period and recognized over a duration of less than one year . The following table presents revenue by service type (in thousands): Three Months Ended May 1, 2020 May 3, 2019 Managed Security Solutions revenue $ 106,357 $ 99,098 Security and Risk Consulting revenue 34,824 33,744 Total revenue $ 141,181 $ 132,842 The deferred revenue balance does not represent the total contract value of annual or multi-year, non-cancelable subscription agreements. Rather, it represents the aggregate amount of billing in advance of service delivery. The Company invoices its customers based on a variety of billing schedules. During the three months ended May 1, 2020 , on average, 58% of the Company's recurring revenue was billed in advance and approximately 42% was billed on either a monthly or a 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 three months ended May 1, 2020 and May 3, 2019 are as follows (in thousands): As of January 31, 2020 Upfront payments received and billings during the three months ended May 1, 2020 Revenue recognized during the three months ended May 1, 2020 As of May 1, 2020 Deferred revenue $ 188,537 $ 95,768 $ (94,375 ) $ 189,930 As of February 1, 2019 Upfront payments received and billings during the three months ended May 3, 2019 Revenue recognized during the three months ended May 3, 2019 As of May 3, 2019 Deferred revenue $ 173,929 $ 87,863 $ (84,498 ) $ 177,294 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 revenue. As of May 1, 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 $ 267,464 $ 154,540 $ 80,848 $ 24,140 $ 7,936 Performance obligation - backlog 27,258 9,846 9,499 6,835 1,079 Total $ 294,722 $ 164,386 $ 90,347 $ 30,975 $ 9,014 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 three months ended May 1, 2020 and May 3, 2019 are as follows (in thousands): As of January 31, 2020 Amount capitalized Amount recognized As of May 1, 2020 Deferred commissions $ 62,785 $ 1,436 $ (5,489 ) $ 58,732 Deferred fulfillment costs 11,366 1,460 (1,395 ) 11,431 As of February 1, 2019 Amount capitalized Amount recognized As of May 3, 2019 Deferred commissions $ 62,895 $ 3,884 $ (3,914 ) $ 62,865 Deferred fulfillment costs 10,973 1,570 (1,362 ) 11,181 As referenced in the Annual Report, 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 a change in 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 three months ended May 1, 2020 of $1.1 million on a pre-tax basis, or $0.01 on a per share basis. The Company did not record any impairment losses on the deferred commissions or deferred fulfillment costs during the three months ended May 1, 2020 or May 3, 2019 . |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
May 01, 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 May 1, 2020 and January 31, 2020 . 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 May 1, 2020 . Intangible Assets The Company's intangible assets as of May 1, 2020 and January 31, 2020 were as follows: May 1, 2020 January 31, 2020 Gross Accumulated Amortization Net Gross Accumulated Amortization Net (in thousands) Customer relationships $ 189,518 $ (94,770 ) $ 94,748 $ 189,518 $ (91,246 ) $ 98,272 Technology 137,371 (89,168 ) 48,203 137,371 (85,709 ) 51,662 Finite-lived intangible assets 326,889 (183,938 ) 142,951 326,889 (176,955 ) 149,934 Trade name 30,118 — 30,118 30,118 — 30,118 Total intangible assets $ 357,007 $ (183,938 ) $ 173,069 $ 357,007 $ (176,955 ) $ 180,052 Amortization expense related to finite-lived intangible assets was approximately $7.0 million and $6.9 million for each of the three months ended May 1, 2020 and May 3, 2019 , respectively. Amortization expense is included within cost of revenue and general and administrative expense in the Condensed Consolidated Statements of Operations. There were no impairment charges related to intangible assets during the three months ended May 1, 2020 or May 3, 2019 |
Debt
Debt | 3 Months Ended |
May 01, 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 subsequently extended on the same terms for additional one -year terms. During the three months ended May 1, 2020, the facility was amended and restated to extend the maturity date from March 26, 2020 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. There was no outstanding balance under the credit facility as of May 1, 2020 or January 31, 2020 . 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. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
May 01, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Legal Contingencies — From time to time, the Company is involved in claims and legal proceedings that arise in the ordinary course of business. The Company accrues a liability when it believes that it is both probable that a liability has been incurred and that it can reasonably estimate the amount of the loss. The Company reviews the status of such matters at least quarterly and adjusts its liabilities as necessary to reflect ongoing negotiations, settlements, rulings, advice of legal counsel and other relevant information. Whether the outcome of any claim, suit, assessment, investigation or legal proceeding, individually or collectively, could have a material adverse effect on the Company's business, financial condition, results of operations or cash flows will depend on a number of factors, including the nature, timing and amount of any associated expenses, amounts paid in settlement, damages or other remedies or consequences. To the extent new information is obtained and the Company's views on the probable outcomes of claims, suits, assessments, investigations or legal proceedings change, changes in accrued liabilities would be recorded in the period in which such a determination is made. As of May 1, 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 three months ended May 1, 2020 and May 3, 2019 , the Company had no customer that represented 10% or more of its net revenue. |
Leases
Leases | 3 Months Ended |
May 01, 2020 | |
Leases [Abstract] | |
Leases | LEASES The Company recorded operating lease cost for facilities of approximately $1.5 million and $1.4 million for the three months ended May 1, 2020 and May 3, 2019 , respectively. Operating lease cost include expenses in connection with variable lease costs of $0.2 million and $0.3 million for the three months ended May 1, 2020 and May 3, 2019 , respectively, which primarily consisted of utilities and common area charges. For the three months ended May 1, 2020 and May 3, 2019 , the Company recorded operating lease cost for equipment leases of approximately $0.7 million and $0.3 million , respectively. For the three months ended May 1, 2020 and May 3, 2019, equipment lease cost included $0.6 and $0.4 million , respectively, for short-term leases. Lease expense for equipment was included in cost of revenues. Cash paid for amounts included in the measurement of operating lease liabilities was $0.9 million and $1.3 million during the three months ended May 1, 2020 and May 3, 2019 , respectively. Weighted-average information associated with the measurement of the Company’s remaining operating lease obligations is as follows: May 1, 2020 Weighted-average remaining lease term 5.6 years Weighted-average discount rate 5.34 % The following table summarizes the maturity of the Company's operating lease liabilities as of May 1, 2020 (in thousands): Fiscal Years Ending May 1, 2020 2021 $ 4,119 2022 6,474 2023 5,764 2024 5,325 2025 4,556 Thereafter 7,650 Total operating lease payments $ 33,888 Less imputed interest (4,983 ) Total operating lease liabilities $ 28,905 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. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
May 01, 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, on which date the program terminated. Repurchases under the program could 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 were determined by management based upon market conditions and other factors. During the three months ended May 1, 2020 , no |
Stock-Based Compensation and Ot
Stock-Based Compensation and Other Long-Term Performance Incentives | 3 Months Ended |
May 01, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation And Other Long-Term Performance Incentives | STOCK-BASED COMPENSATION AND OTHER LONG-TERM PERFORMANCE INCENTIVES The SecureWorks Corp. 2016 Long-Term Incentive Plan (the "2016 Plan") was adopted effective April 18, 2016. The 2016 Plan provides for the grant of options, stock appreciation rights, restricted stock, restricted stock units, deferred stock units, unrestricted stock, dividend equivalent rights, other equity-based awards, and cash bonus awards. Awards may be granted under the 2016 Plan to individuals who are employees, officers, or non-employee directors of the Company or any of its affiliates, consultants and advisors who perform services for the Company or any of its affiliates, and any other individual whose participation in the 2016 Plan is determined to be in the best interests of the Company by the compensation committee of the board of directors. Under the 2016 Plan, during the three months ended May 1, 2020 and May 3, 2019 , the Company granted 2,428,357 and 1,158,276 restricted stock units, respectively, and 454,546 and 175,000 restricted stock awards, respectively. The annual restricted stock unit and restricted stock awards granted during both such periods vest over a three-year period. Approximately 17% and 50% of such awards granted during the three months ended May 1, 2020 and May 3, 2019 , respectively, are subject to performance conditions. Approximately one-half of the performance awards granted during the three months ended May 1, 2020 have been valued and are considered outstanding for accounting purposes. The Company grants long-term cash awards to certain employees under the 2016 Plan. The employees who receive these cash awards do not receive equity awards as part of the long-term incentive program. The majority of the cash awards issued prior to fiscal 2021 are subject to various performance conditions and vest in equal annual installments over a three-year period. The cash awards issued during the three months ended May 1, 2020 are not subject to any performance conditions and vest in equal installments over a three-year period. The Company granted cash awards of $8.1 million and $6.9 million during the three months ended May 1, 2020 and May 3, 2019 , respectively. The Company recognized $1.6 million and $1.8 million of related compensation expense for the three months ended May 1, 2020 and May 3, 2019 |
Income and Other Taxes
Income and Other Taxes | 3 Months Ended |
May 01, 2020 | |
Income Tax Disclosure [Abstract] | |
Income and Other Taxes | INCOME AND OTHER TAXES The Company's effective income tax rate for the three months ended May 1, 2020 and May 3, 2019 was as follows (in thousands, except percentages): Three Months Ended May 1, 2020 May 3, 2019 Loss before income taxes $ (9,776 ) $ (14,204 ) Income tax benefit $ (2,240 ) $ (5,934 ) Effective tax rate 22.9 % 41.8 % During the periods presented in the accompanying condensed consolidated financial statements, the Company did not file separate federal tax returns as the Company generally was included in the tax grouping of other Dell entities within the respective entity's tax jurisdiction. The income tax benefit has been calculated using the separate return method, modified to apply the benefits-for-loss approach. Under the benefits-for-loss approach, net operating losses or other tax attributes are characterized as realized by the Company when those attributes are utilized by other members of the Dell consolidated group. The Company's effective tax benefit rate was 22.9% for the three months ended May 1, 2020 and 41.8% for the three months ended May 3, 2019 . The change in the Company's effective income tax rate between the periods was primarily attributable to the impact of certain discrete adjustments related to stock-based compensation expense for the three months ended May 1, 2020 and May 3, 2019 of approximately $0.3 million and $2.2 million , respectively. The change related specifically to the impact of the vesting of certain equity awards for which the fair value on the vesting date was lower than the fair value for the three months ended May 1, 2020 and higher than the fair value for the three months ended May 3, 2019 on the date the equity awards were originally granted. The change in fair value, which is measured by the price of the Class A common stock as reported on the Nasdaq Global Select Market, resulted in a lower actual tax deduction for the three months ended May 1, 2020 and a higher actual tax deduction for the three months ended May 3, 2019 than the amounts deducted for financial reporting purposes. As of May 1, 2020 and January 31, 2020 , the Company had $4.6 million and $4.6 million , respectively, of deferred tax assets related to net operating loss carryforwards for state tax returns that are not included with those of other Dell entities. These net operating loss carryforwards began expiring in the fiscal year ended February 1, 2019. 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 May 1, 2020 and January 31, 2020 . Because the Company is included in the tax filings of 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 three months ended May 1, 2020 would have been $9.8 million , $1.4 million and $8.4 million , respectively, as a result of the recognition of a valuation allowance that would have been recorded on a significant amount of 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. Net deferred tax balances are included in other non-current assets and other non-current liabilities in the Condensed Consolidated Statements of Financial Position. As of May 1, 2020 and January 31, 2020 , the Company had $11.0 million and $10.0 million , respectively, of a net operating loss tax receivable from Dell. The Company had $6.7 million and $6.6 million of unrecognized tax benefits as of May 1, 2020 and January 31, 2020 , respectively. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
May 01, 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 $1.0 million and $1.6 million for the three months ended May 1, 2020 and May 3, 2019 , 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 that is capitalized within property and equipment in the Condensed Consolidated Statements of Financial Position. These purchases were made at pricing that is intended to approximate arm's-length pricing. Purchases of computer equipment from Dell and EMC Corporation, a wholly-owned subsidiary of Dell ("EMC"), totaled $0.3 million and $1.4 million for the three months ended May 1, 2020 and May 3, 2019 , respectively. EMC, a company that provides enterprise software and storage, 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 $0.4 million and $0.8 million for the three months ended May 1, 2020 and May 3, 2019 , respectively. In October 2019, VMware acquired Carbon Black Inc., a security business with which the Company had an existing commercial relationship. For the three months ended May 1, 2020 , purchases by the Company of solutions from Carbon Black totaled $1.6 million . The Company recognized revenue related to solutions provided to other subsidiaries of Dell, consisting of RSA Security LLC, Pivotal Software, Inc. and Boomi, Inc. The Company recognized no revenue for the three months ended May 1, 2020 and $26 thousand for the three months ended May 3, 2019 . Purchases by the Company from these subsidiaries totaled $60 thousand and $56 thousand for the three months ended May 1, 2020 and May 3, 2019 , respectively. The Company also recognized revenue related to solutions provided to significant beneficial owners of Secureworks, which include Michael S. Dell, Chairman and Chief Executive Officer of Dell Technologies and Dell Inc. and Silver Lake Partners III, L.P. 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, as well as Silver Lake Partners III, L.P., totaled $0.1 million for the three months ended May 1, 2020 and May 3, 2019 , respectively. The Company provides solutions to certain customers whose contractual relationship has historically been with Dell rather than Secureworks, although the Company has the primary responsibility to provide the services. Effective August 1, 2015, in connection with the IPO, many of such customer contracts were transferred from Dell to the Company, forming a direct contractual relationship between the Company and the end customer. For customers whose contracts have not yet been transferred and for contracts subsequently originated through Dell under a reseller agreement, the Company recognized revenues of approximately $14.6 million and $14.8 million for the three months ended May 1, 2020 and May 3, 2019 , respectively. In addition, as of May 1, 2020 , the Company had approximately $1.7 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 at pricing that is intended to approximate arm's-length pricing. Such revenues totaled approximately $6.0 million and $3.3 million for the three months ended May 1, 2020 and May 3, 2019 , respectively. The Company settles in cash its related party balances with Dell on a quarterly basis. As a result of the foregoing related party arrangements, the Company has recorded the following related party balances in the Condensed Consolidated Statements of Financial Position as of May 1, 2020 and January 31, 2020 (in thousands). May 1, January 31, 2020 Net intercompany payable (included in "Accrued and other current liabilities") $ 5,763 $ 3,209 Accounts receivable from customers under reseller agreements with Dell (included in "Accounts receivable, net") $ 11,396 $ 13,674 Net operating loss tax sharing receivable under agreement with Dell (included in "Other current assets" and "Other non-current assets" at May 1, 2020 and in "Other current assets" at January 31, 2020) $ 11,021 $ 10,040 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
May 01, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | FAIR VALUE MEASUREMENTS The Company measures fair value within the guidance of the three-level valuation hierarchy. This hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The categorization of a measurement within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows: • Level 1 - Quoted market prices in active markets for identical assets or liabilities • Level 2 - Other observable market-based inputs or unobservable inputs that are corroborated by market data • Level 3 - Significant unobservable inputs Assets and Liabilities Measured at Fair Value on a Recurring Basis The assets and liabilities of the Company that are measured at fair value on a recurring basis using the respective input levels as of May 1, 2020 and January 31, 2020 were as follows (in thousands): May 1, January 31, 2020 Level 1 Level 1 Cash equivalents - Money Market Funds $ 75,810 $ 100,476 Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis The carrying amounts of the Company's accounts receivable, accounts payable and accrued expenses approximate their respective fair value due to their short-term nature. |
Description of the Business a_2
Description of the Business and Basis of Presentation (Policies) | 3 Months Ended |
May 01, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation The Company's condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of financial statements in accordance with GAAP requires management to make assumptions and estimations that affect the amounts reported in the Company's financial statements and notes. The inputs into certain of the Company's assumptions and estimations considered the economic implications of the coronavirus disease 2019 ("COVID-19") pandemic on the Company's critical and significant accounting estimates. The condensed consolidated financial statements include assets, liabilities, revenue and expenses of all majority-owned subsidiaries. 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 is charged in accordance with a shared services agreement that went into effect on August 1, 2015. For more information regarding the charges for these services and related party transactions, see " Note 11 —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 10 —Income and Other Taxes" for more information. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information and the requirements of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statement presentation. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. In the opinion of management, all adjustments consisting of normal recurring accruals and disclosures considered necessary for a fair statement have been included. All intercompany accounts and transactions have been eliminated in consolidation. The accompanying condensed consolidated financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto for the year ended January 31, 2020 included in Part II, Item 8 of the Company's Annual Report on Form 10-K filed with the SEC on March 27, 2020 (the "Annual Report"). |
Fiscal Year | Fiscal Year The Company’s fiscal year is the 52- or 53-week period ending on the Friday closest to January 31. The Company refers to the fiscal year ending January 29, 2021 and the fiscal year ended January 31, 2020 as fiscal 2021 and fiscal 2020 , respectively. Both fiscal 2021 and fiscal 2020 have 52 weeks, and each quarter has 13 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 Condensed 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 Condensed Consolidated Statements of Financial Position, estimates are used in determining the valuation and recoverability of assets, such as accounts receivables, inventories, fixed assets, goodwill and other identifiable intangible assets, and estimates are used in determining the reported amounts of liabilities, such as taxes payable and the impact of contingencies, all of which also impact the Condensed Consolidated Statements of Operations. Actual results could differ from these estimates due to risks and uncertainties, including uncertainty in the current economic environment due to the COVID-19 pandemic. The Company considered the potential impact of the COVID-19 pandemic on its estimates and assumptions and determined there was not a material impact to the Company's condensed consolidated financial statements as of and for the three months ended May 1, 2020 |
Recently Adopted/Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncements Intangibles - Goodwill and Other - Internal-Use Software —The Company adopted Accounting Standard Update ("ASU") 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," effective February 1, 2020. ASU 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 adoption of the standard had no material impact on the condensed consolidated financial statements. Intangibles - Goodwill and Other —The Company adopted ASU No. 2017-04, "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment," effective February 1, 2020. ASU 2017-04 eliminates Step 2 of the goodwill impairment test, which required the Company to determine the implied fair value of goodwill by allocating the reporting unit's fair value to each of its assets and liabilities as if the reporting unit was acquired in a business acquisition. 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 adoption of the standard had no impact on the condensed consolidated financial statements. Financial Instruments - Credit Losses —The Company adopted ASU No. 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," effective February 1, 2020. 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 adoption of the standard had no material impact on the condensed consolidated financial statements. Under the new standard, the Company assesses its allowance for credit losses on trade receivables by taking into consideration forecasts of future economic conditions, information about past events, such as its historical trend of write-offs, and customer-specific circumstances, such as bankruptcies and disputes. The allowance for credit losses on trade receivables is recorded in operating expenses in the Company's condensed consolidated statement of operations. 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 allocation of 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. |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies There have been no significant changes to the Company’s significant accounting policies as of and for the three months ended May 1, 2020 , as compared to the significant accounting policies described in the Annual Report. |
Fair Value Measurements | The Company measures fair value within the guidance of the three-level valuation hierarchy. This hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The categorization of a measurement within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows: • Level 1 - Quoted market prices in active markets for identical assets or liabilities • Level 2 - Other observable market-based inputs or unobservable inputs that are corroborated by market data • Level 3 - Significant unobservable inputs |
Loss Per Share (Tables)
Loss Per Share (Tables) | 3 Months Ended |
May 01, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Net Loss Per Common Share, Basic and Diluted | The following table sets forth the computation of loss per common share (in thousands, except per share amounts): Three Months Ended May 1, 2020 May 3, 2019 Numerator: Net loss $ (7,536 ) $ (8,270 ) Denominator: Weighted-average number of shares outstanding: Basic and Diluted 80,938 80,467 Loss per common share: Basic and Diluted $ (0.09 ) $ (0.10 ) Weighted-average anti-dilutive stock options, non-vested restricted stock and restricted stock units 5,294 5,456 |
Contract Balances and Contrac_2
Contract Balances and Contract Costs (Tables) | 3 Months Ended |
May 01, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue by Service Type | The following table presents revenue by service type (in thousands): Three Months Ended May 1, 2020 May 3, 2019 Managed Security Solutions revenue $ 106,357 $ 99,098 Security and Risk Consulting revenue 34,824 33,744 Total revenue $ 141,181 $ 132,842 |
Schedule of Deferred Revenue | Changes to the Company's deferred revenue during the three months ended May 1, 2020 and May 3, 2019 are as follows (in thousands): As of January 31, 2020 Upfront payments received and billings during the three months ended May 1, 2020 Revenue recognized during the three months ended May 1, 2020 As of May 1, 2020 Deferred revenue $ 188,537 $ 95,768 $ (94,375 ) $ 189,930 As of February 1, 2019 Upfront payments received and billings during the three months ended May 3, 2019 Revenue recognized during the three months ended May 3, 2019 As of May 3, 2019 Deferred revenue $ 173,929 $ 87,863 $ (84,498 ) $ 177,294 |
Expected Timing to Recognize Remaining Performance Obligation | As of May 1, 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 $ 267,464 $ 154,540 $ 80,848 $ 24,140 $ 7,936 Performance obligation - backlog 27,258 9,846 9,499 6,835 1,079 Total $ 294,722 $ 164,386 $ 90,347 $ 30,975 $ 9,014 |
Schedule of Deferred Commissions and Fulfillment Costs | Changes in the balance of total deferred commission and total deferred fulfillment costs during the three months ended May 1, 2020 and May 3, 2019 are as follows (in thousands): As of January 31, 2020 Amount capitalized Amount recognized As of May 1, 2020 Deferred commissions $ 62,785 $ 1,436 $ (5,489 ) $ 58,732 Deferred fulfillment costs 11,366 1,460 (1,395 ) 11,431 As of February 1, 2019 Amount capitalized Amount recognized As of May 3, 2019 Deferred commissions $ 62,895 $ 3,884 $ (3,914 ) $ 62,865 Deferred fulfillment costs 10,973 1,570 (1,362 ) 11,181 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
May 01, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Indefinite-Lived Intangible Assets | The Company's intangible assets as of May 1, 2020 and January 31, 2020 were as follows: May 1, 2020 January 31, 2020 Gross Accumulated Amortization Net Gross Accumulated Amortization Net (in thousands) Customer relationships $ 189,518 $ (94,770 ) $ 94,748 $ 189,518 $ (91,246 ) $ 98,272 Technology 137,371 (89,168 ) 48,203 137,371 (85,709 ) 51,662 Finite-lived intangible assets 326,889 (183,938 ) 142,951 326,889 (176,955 ) 149,934 Trade name 30,118 — 30,118 30,118 — 30,118 Total intangible assets $ 357,007 $ (183,938 ) $ 173,069 $ 357,007 $ (176,955 ) $ 180,052 |
Schedule of Finite-Lived Intangible Assets | The Company's intangible assets as of May 1, 2020 and January 31, 2020 were as follows: May 1, 2020 January 31, 2020 Gross Accumulated Amortization Net Gross Accumulated Amortization Net (in thousands) Customer relationships $ 189,518 $ (94,770 ) $ 94,748 $ 189,518 $ (91,246 ) $ 98,272 Technology 137,371 (89,168 ) 48,203 137,371 (85,709 ) 51,662 Finite-lived intangible assets 326,889 (183,938 ) 142,951 326,889 (176,955 ) 149,934 Trade name 30,118 — 30,118 30,118 — 30,118 Total intangible assets $ 357,007 $ (183,938 ) $ 173,069 $ 357,007 $ (176,955 ) $ 180,052 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
May 01, 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: May 1, 2020 Weighted-average remaining lease term 5.6 years Weighted-average discount rate 5.34 % |
Maturities of Operating Lease Liabilities | The following table summarizes the maturity of the Company's operating lease liabilities as of May 1, 2020 (in thousands): Fiscal Years Ending May 1, 2020 2021 $ 4,119 2022 6,474 2023 5,764 2024 5,325 2025 4,556 Thereafter 7,650 Total operating lease payments $ 33,888 Less imputed interest (4,983 ) Total operating lease liabilities $ 28,905 |
Income and Other Taxes (Tables)
Income and Other Taxes (Tables) | 3 Months Ended |
May 01, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rate Reconciliation | The Company's effective income tax rate for the three months ended May 1, 2020 and May 3, 2019 was as follows (in thousands, except percentages): Three Months Ended May 1, 2020 May 3, 2019 Loss before income taxes $ (9,776 ) $ (14,204 ) Income tax benefit $ (2,240 ) $ (5,934 ) Effective tax rate 22.9 % 41.8 % |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 3 Months Ended |
May 01, 2020 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | As a result of the foregoing related party arrangements, the Company has recorded the following related party balances in the Condensed Consolidated Statements of Financial Position as of May 1, 2020 and January 31, 2020 (in thousands). May 1, January 31, 2020 Net intercompany payable (included in "Accrued and other current liabilities") $ 5,763 $ 3,209 Accounts receivable from customers under reseller agreements with Dell (included in "Accounts receivable, net") $ 11,396 $ 13,674 Net operating loss tax sharing receivable under agreement with Dell (included in "Other current assets" and "Other non-current assets" at May 1, 2020 and in "Other current assets" at January 31, 2020) $ 11,021 $ 10,040 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
May 01, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The assets and liabilities of the Company that are measured at fair value on a recurring basis using the respective input levels as of May 1, 2020 and January 31, 2020 were as follows (in thousands): May 1, January 31, 2020 Level 1 Level 1 Cash equivalents - Money Market Funds $ 75,810 $ 100,476 |
Description of the Business a_3
Description of the Business and Basis of Presentation - Narrative (Details) | 3 Months Ended |
May 01, 2020segment | |
Class of Stock [Line Items] | |
Number of reportable segments | 1 |
IPO | Denali | |
Class of Stock [Line Items] | |
Percent of outstanding shares owned | 85.20% |
Percent of voting interests owned | 98.30% |
Loss Per Share (Details)
Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
May 01, 2020 | May 03, 2019 | |
Numerator: | ||
Net loss | $ (7,536) | $ (8,270) |
Denominator: | ||
Weighted-average common shares outstanding (basic and diluted) (in shares) | 80,938 | 80,467 |
Loss per common share: | ||
Basic and Diluted (usd per share) | $ (0.09) | $ (0.10) |
Weighted-average anti-dilutive stock options, non-vested restricted stock and restricted stock units (in shares) | 5,294 | 5,456 |
Contract Balances and Contrac_3
Contract Balances and Contract Costs - Narrative (Details) | 3 Months Ended |
May 01, 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]: 2020-05-02 | |
Disaggregation of Revenue [Line Items] | |
Performance obligation period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-05-02 | 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]: 2020-05-02 | 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]: 2021-05-01 | |
Disaggregation of Revenue [Line Items] | |
Performance obligation period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-04-30 | |
Disaggregation of Revenue [Line Items] | |
Performance obligation period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-05-06 | |
Disaggregation of Revenue [Line Items] | |
Performance obligation period |
Contract Balances and Contrac_4
Contract Balances and Contract Costs - Disaggregation of Revenue by Service Type (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 01, 2020 | May 03, 2019 | |
Disaggregation of Revenue [Line Items] | ||
Net revenue | $ 141,181 | $ 132,842 |
Managed Security Solutions revenue | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 106,357 | 99,098 |
Security and Risk Consulting revenue | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | $ 34,824 | $ 33,744 |
Contract Balances and Contrac_5
Contract Balances and Contract Costs - Deferred Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 01, 2020 | May 03, 2019 | |
Change in Contract with Customer, Liability [Roll Forward] | ||
Deferred Revenue, Beginning of period | $ 188,537 | $ 173,929 |
Deferred revenue, Upfront payments received and billings | 95,768 | 87,863 |
Deferred revenue, Revenue recognized | (94,375) | (84,498) |
Deferred Revenue, End of period | $ 189,930 | $ 177,294 |
Contract Balances and Contrac_6
Contract Balances and Contract Costs - Remaining Performance Obligation Total (Details) $ in Thousands | May 01, 2020USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 294,722 |
Performance obligation - active | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | 267,464 |
Performance obligation - backlog | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 27,258 |
Contract Balances and Contrac_7
Contract Balances and Contract Costs - Remaining Performance Obligation (Details) $ in Thousands | May 01, 2020USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 294,722 |
Performance obligation - active | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | 267,464 |
Performance obligation - backlog | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | 27,258 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-05-02 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | 164,386 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-05-02 | Performance obligation - active | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | 154,540 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-05-02 | Performance obligation - backlog | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | 9,846 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-05-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | 90,347 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-05-01 | Performance obligation - active | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | 80,848 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-05-01 | Performance obligation - backlog | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | 9,499 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-04-30 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | 30,975 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-04-30 | Performance obligation - active | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | 24,140 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-04-30 | Performance obligation - backlog | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | 6,835 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-05-06 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | 9,014 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-05-06 | Performance obligation - active | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | 7,936 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-05-06 | Performance obligation - backlog | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 1,079 |
Contract Balances and Contrac_8
Contract Balances and Contract Costs - Remaining Performance Obligation Time Period (Details) | May 01, 2020 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-05-02 | |
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]: 2020-05-02 | 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]: 2020-05-02 | 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]: 2021-05-01 | |
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]: 2021-05-01 | 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]: 2021-05-01 | 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]: 2022-04-30 | |
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]: 2022-04-30 | 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]: 2022-04-30 | 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]: 2023-05-06 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligation period | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-05-06 | 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]: 2023-05-06 | Performance obligation - backlog | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligation period |
Contract Balances and Contrac_9
Contract Balances and Contract Costs - Deferred Commissions and Fulfillment Costs (Details) - USD ($) | 3 Months Ended | |||
May 01, 2020 | May 03, 2019 | Nov. 01, 2019 | Aug. 02, 2019 | |
Capitalized Contract Cost [Roll Forward] | ||||
Impact of increase in deferred commissions expense on a per share basis (usd per share) | $ 0.01 | |||
Deferred commissions | ||||
Capitalized Contract Cost [Roll Forward] | ||||
Beginning balance | $ 62,785,000 | $ 62,895,000 | ||
Amount capitalized | 1,436,000 | 3,884,000 | ||
Amount recognized | (5,489,000) | (3,914,000) | ||
Ending balance | 58,732,000 | 62,865,000 | ||
Deferred commissions amortization period | 6 years | 7 years | ||
Increase in deferred commissions expense | 1,100,000 | |||
Impairment losses on deferred commissions and deferred fulfillment costs | 0 | |||
Deferred fulfillment costs | ||||
Capitalized Contract Cost [Roll Forward] | ||||
Beginning balance | 11,366,000 | 10,973,000 | ||
Amount capitalized | 1,460,000 | 1,570,000 | ||
Amount recognized | (1,395,000) | (1,362,000) | ||
Ending balance | $ 11,431,000 | 11,181,000 | ||
Impairment losses on deferred commissions and deferred fulfillment costs | $ 0 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands | May 01, 2020 | Jan. 31, 2020 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 416,487 | $ 416,487 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) | 3 Months Ended | ||
May 01, 2020 | May 03, 2019 | Jan. 31, 2020 | |
Finite-Lived Intangible Assets [Line Items] | |||
Gross | $ 326,889,000 | $ 326,889,000 | |
Accumulated Amortization | (183,938,000) | (176,955,000) | |
Net | 142,951,000 | 149,934,000 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||
Gross | 357,007,000 | 357,007,000 | |
Accumulated Amortization | (183,938,000) | (176,955,000) | |
Net | 173,069,000 | 180,052,000 | |
Amortization expense | 7,000,000 | $ 6,900,000 | |
Impairment charges | 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 | (94,770,000) | (91,246,000) | |
Net | 94,748,000 | 98,272,000 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||
Accumulated Amortization | (94,770,000) | (91,246,000) | |
Technology | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross | 137,371,000 | 137,371,000 | |
Accumulated Amortization | (89,168,000) | (85,709,000) | |
Net | 48,203,000 | 51,662,000 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||
Accumulated Amortization | $ (89,168,000) | $ (85,709,000) |
Debt (Details)
Debt (Details) - Line of Credit - Revolving Credit Facility - USD ($) | Nov. 02, 2015 | May 01, 2020 | Jan. 31, 2020 |
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 30,000,000 | ||
Debt instrument, term | 1 year | ||
Debt instrument, term, extension | 1 year | ||
Maximum amount outstanding during period | $ 30,000,000 | ||
Commitment fee percentage | 0.35% | ||
Line of credit, outstanding balance | $ 0 | $ 0 | |
Additional borrowing capacity | $ 30,000,000 | ||
London Interbank Offered Rate (LIBOR) | |||
Debt Instrument [Line Items] | |||
Basis spread on variable rate | 1.30% |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) | 3 Months Ended |
May 01, 2020 | |
Minimum | |
Other Commitments [Line Items] | |
Income tax examination, period | 3 years |
Maximum | |
Other Commitments [Line Items] | |
Income tax examination, period | 4 years |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
May 01, 2020 | May 03, 2019 | |
Lessee, Lease, Description [Line Items] | ||
Variable lease cost | $ 0.2 | $ 0.3 |
Short-term lease cost | 0.6 | 0.4 |
Operating lease payments | $ 0.9 | 1.3 |
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 | $ 1.5 | 1.4 |
Leased Equipment | ||
Lessee, Lease, Description [Line Items] | ||
Operating lease costs | $ 0.7 | $ 0.3 |
Leases - Weighted Average (Deta
Leases - Weighted Average (Details) | May 01, 2020 |
Leases [Abstract] | |
Weighted-average remaining lease term | 5 years 7 months 6 days |
Weighted-average discount rate | 5.34% |
Leases - Maturities of Operatin
Leases - Maturities of Operating Lease Liabilities (Details) $ in Thousands | May 01, 2020USD ($) |
Operating Leases, After Adoption of 842: | |
2021 | $ 4,119 |
2022 | 6,474 |
2023 | 5,764 |
2024 | 5,325 |
2025 | 4,556 |
Thereafter | 7,650 |
Total operating lease payments | 33,888 |
Less imputed interest | (4,983) |
Total operating lease liabilities | $ 28,905 |
Stockholders' Equity - Narrativ
Stockholders' Equity - Narrative (Details) - USD ($) | 3 Months Ended | ||
May 01, 2020 | Mar. 26, 2019 | Sep. 26, 2018 | |
Equity [Abstract] | |||
Stock repurchase program, authorized amount | $ 15,000,000 | $ 15,000,000 | |
Stock repurchased during period, shares | 0 |
Stock-Based Compensation and _2
Stock-Based Compensation and Other Long-Term Performance Incentives (Details) - USD ($) $ in Millions | 3 Months Ended | |
May 01, 2020 | May 03, 2019 | |
Restricted Stock Units (RSUs) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Awards issued (in shares) | 2,428,357 | 1,158,276 |
Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Awards issued (in shares) | 454,546 | 175,000 |
Restricted Stock and Restricted Stock Units | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Award vesting period | 3 years | 3 years |
Percentage of grants issued subject to performance conditions | 17.00% | 50.00% |
Percentage of grants outstanding subject to performance conditions | 50.00% | |
Performance Cash Awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Awards granted | $ 8.1 | $ 6.9 |
Compensation expense | $ 1.6 | $ 1.8 |
Income and Other Taxes - Effect
Income and Other Taxes - Effective Income Tax Rate (Details) - USD ($) $ in Thousands | 3 Months Ended | |
May 01, 2020 | May 03, 2019 | |
Income Tax Disclosure [Abstract] | ||
Loss before income taxes | $ (9,776) | $ (14,204) |
Income tax benefit | $ (2,240) | $ (5,934) |
Effective tax rate | 22.90% | 41.80% |
Income and Other Taxes - Narrat
Income and Other Taxes - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
May 01, 2020 | May 03, 2019 | Jan. 31, 2020 | |
Valuation Allowance [Line Items] | |||
Effective tax rate | 22.90% | 41.80% | |
Expense relating to vesting of equity awards | $ 300 | $ 2,200 | |
Loss carryforwards | 4,600 | $ 4,600 | |
Loss before income taxes | 9,776 | 14,204 | |
Income tax benefit | 2,240 | 5,934 | |
Net loss | 7,536 | $ 8,270 | |
Unrecognized tax benefits | 6,700 | 6,600 | |
Principal Owner | Dell Inc. | |||
Valuation Allowance [Line Items] | |||
Net operating loss tax sharing receivable under agreement with Dell | 11,021 | $ 10,000 | |
Prepared using separate return method | |||
Valuation Allowance [Line Items] | |||
Loss before income taxes | 9,800 | ||
Income tax benefit | 1,400 | ||
Net loss | $ 8,400 |
Related Party Transactions - Na
Related Party Transactions - Narrative (Details) - USD ($) | 3 Months Ended | |
May 01, 2020 | May 03, 2019 | |
Related Party Transaction [Line Items] | ||
Charged under shared services agreement | $ 27,516,000 | $ 23,638,000 |
Purchases of computer equipment from Dell | 1,020,000 | 7,016,000 |
Revenues | 141,181,000 | 132,842,000 |
Dell Inc. | ||
Related Party Transaction [Line Items] | ||
Performance bonds, outstanding | 1,700,000 | |
Dell Inc. | Principal Owner | ||
Related Party Transaction [Line Items] | ||
Charged under shared services agreement | 1,000,000 | 1,600,000 |
Dell Inc. | Principal Owner | Contracts Not Yet Transferred | ||
Related Party Transaction [Line Items] | ||
Revenues | 14,600,000 | 14,800,000 |
Dell Inc. | Principal Owner | Solutions Purchases | ||
Related Party Transaction [Line Items] | ||
Revenues | 6,000,000 | 3,300,000 |
Dell Inc. | Chief Executive Officer | ||
Related Party Transaction [Line Items] | ||
Revenues | 100,000 | 100,000 |
Dell and EMC | Principal Owner | ||
Related Party Transaction [Line Items] | ||
Purchases of computer equipment from Dell | 300,000 | 1,400,000 |
EMC and VMware | Subsidiary of Common Parent | ||
Related Party Transaction [Line Items] | ||
Purchase of annual maintenance services | 400,000 | 800,000 |
Carbon Black Inc. | Subsidiary of Common Parent | Solutions Purchases | ||
Related Party Transaction [Line Items] | ||
Purchases of solutions from Carbon Black | 1,600,000 | |
RSA Security LLC and Pivotal Software, Inc. | Subsidiary of Common Parent | ||
Related Party Transaction [Line Items] | ||
Purchase of annual maintenance services | 60,000 | 56,000 |
Revenues | $ 0 | $ 26,000 |
Related Party Transactions - Ba
Related Party Transactions - Balances in Condensed Consolidated Statements of Financial Position (Details) - USD ($) $ in Thousands | May 01, 2020 | Jan. 31, 2020 |
Related Party Transaction [Line Items] | ||
Net intercompany payable (included in Accrued and other current liabilities) | $ 5,763 | $ 3,209 |
Net operating loss tax sharing receivable under agreement with Dell | 27,404 | 27,449 |
Dell Inc. | Principal Owner | ||
Related Party Transaction [Line Items] | ||
Accounts receivable from customers under reseller agreements with Dell (included in Accounts receivable, net) | 11,396 | 13,674 |
Net operating loss tax sharing receivable under agreement with Dell | $ 11,021 | 10,000 |
Net operating loss tax sharing receivable under agreement with Dell | $ 10,040 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | May 01, 2020 | Jan. 31, 2020 |
Money Market Funds | Fair Value, Measurements, Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents - Money Market Funds | $ 75,810 | $ 100,476 |