SCWX - Earnings call transcript Q4 2018

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Operator

Good morning and welcome to the SecureWorks Fourth Quarter and Full Year Fiscal 2018 Financial Results Conference Call.

Following prepared remarks, we will conduct a question-and-answer session. [Operator Instructions] At this time, all participants are in a listen-only mode.

We are broadcasting this call live on the SecureWorks Investor Relations website. After the completion of the call, a recording of the call will be made available on the same site.

the Officer. to turn and Miller, will Accounting Chief I call Teri over VP Now,

begin. may You

Teri Miller

morning, Good morning, fourth thank being live SecureWorks’ of everyone, over and XXXX. recorded. financial Relations to us fiscal archived SecureWorks and also results at review investors.SecureWorks.com. one This will be at today be announcing the same its website call for year. being call internet a the results This accessed The quarter fiscal February is issued SecureWorks This full-year on press release quarter you section and is of for broadcast the X, for joining can the Investor location for webcast XXXX. ended

website. access this release can Investor press SecureWorks Relations the You the on section of

management meaning share loss but include, to with before amortization. will interest, within Reform GAAP statements taxes, revenue Litigation Securities depreciation and and call, guidance of net as Private not of forward-looking XXXX. per forward-looking the Act non-GAAP respect as earnings limited well to, make this adjusted These the are statements During and

could involve these that from and uncertainties those results statements. actual Our forward-looking differ statements anticipated to risks by cause materially

of to or and statements forward-looking our in a Relations made XXXX. this believe information on after in XX-K find XX, All update events. this available can ended date, for forward-looking and we Investor on of obligation to future a earnings call this on/in on uncertainties Securities of as and statements today undertake these Commission’s press Exchange year release as that You website no XXXX, our the We morning’s result this report are reasonable new website. on call based which risks be X, assumptions March annual February Company’s description Form be later the the will and

related and financial accounting, basis. Act on the of of from XXXX. non-GAAP Tax impacts Jobs intangibles of expressed of items these non-GAAP purchase impact Some effect measures amortization a of stock-based tax These this and exclude we the use the are on and call measures compensation, Cuts the

non-GAAP financial in to fourth measures extra information has fiscal GAAP unless for, discussed on Also, periods, GAAP We provided you financial from, intended in recall call to rates considered to or week. analyzing compared non-GAAP be Executive a our Please encourage reconciliations otherwise of the earnings when and of SecureWorks Cote, all is the superior Officer. XX us growth prior release XXXX Chief and With on Wayne performance. have substitute results, and of Michael reminder, today’s the SecureWorks’ financial available Officer to are Financial quarter stated. website. isolation having and with the Non-GAAP are today’s press measures weeks all Jackson, not as to operations measures consider we year measures Chief President are our

by Following questions. limiting our as appreciate to would their as questions many allow you questions remarks, others, prepared we this. covered feel very for and Thank event your our will the we please back you do you. on two allotted you We possible that In come not questions to your will may that to so take additional you ask free time. in of have to are cooperation we to if your re-queue best initial

the Now, Cote. I over Mr. turn would like to to call

Michael Cote

fourth expectations. exceeded perspective, in our XX%. our report sales and for our from a pleased I everyone, history you, thank And that Teri. joining million, was quarter the am this call. XXXX fourth you, to quarter $XXX Revenue earnings the and us best up Thank morning QX for in revenue

and geographies the sequential of The closed group members, determination which in increase number all In total North the XX% deals of result saw million, want our opportunity a America progress in in in work value key demonstrating million the quarters. increase demand security hard quarter, more $X.X in in million, this to all the direct the of quarter, and each In largest complex sequential greater grew industries. of monthly programs we fourth strong in this represents them. we MRR XX% revenue and our recurring than XX $X our is with sequentially to take Our larger, I XX% XX and $XX.X dollar and This all year-over-year thank this group. both sequentially contracts internationally. contracts increased of to

our joined and XX% and APJ our are accelerated our grew in security excited Geoff for on fourth to of general organizations year large for his about as is tremendous with this many us execution SecureWorks' full has meeting improve momentum XX% wealth Geoff Haydon leading while quarter Geoff's the following has as focus and lead continued international Chief hit running. have annual knowledge from full and in Revenue Officer. as the is as XX% his well opportunity X our working year. the sales areas. sales He kick years the roles off the the team I operating and the the of global In remains fact, addition. sales quarter, months industry gained to ground In demand EMEA, sales strong. successfully grew am is been manager he recently and

around the elevating and markets sales globe. people. Progressing, and First, team expanding our

and Second, members. the Increasing the members of new existing efficiency team of accelerating onboarding team productivity.

Optimizing Defining are sales Third, repeatable and methodology. our growth. And and plays message coverage. fourth, that model. executing drive and coverage

pleased am one quarter fourth with progress quarter, the does in trend. a I Although make not our

client the by QX must continue broader base space, expand average must the basis. Our good, were client we in but on we the entire focus productivity on enterprise success as sales a count results increasing remained well. QX we our in to XXXX XX% our team to consistent across with per while increased revenue

some realign allow in for XXXX. areas investment decisions still opportunity based sales levels start improved made business hard which cautiously While this QX QX we on in and will We our to am incremental pipeline, is execution, as certain results there for the I year. in optimistic fiscal resource

to an recognized industry security have across experienced solutions team and accelerate in organization the place, growth. entire required continue We our executive to leadership talent the

One as delivering clients. in to the of a expertise us the faster our in changing a We prevention our embrace threat our is we market opportunity excellence digital We industry our food to this real than an one cyber-attack the excellence fourth know be analytic ever. is to with We these market the clients transforms. leader. threat time company connected multi-million-dollar provide global packaged our that security the client once solutions layered clear. as industry on data, in seek by raise threat has years aggressive a managed The thing earned at by and SecureWorks remediates underway. an an deals Quadrant Magic every threat and today's counter recognized on which and the world. XXth evident signed bar ability to report. and in is we company accolades changing of which platform. and leading consecutive solutions detection We A strength positions program see for seek the strive capability, producer quarter. is models our to we clients passion three year time and Worldwide. the day, our Security as our protect in set contract accordingly. the as change one welcome We XXXX capitalize digitally client powered in hallmarks closed commitment Quadrant to The be has great this believe consistently in of the response protecting this each Leaders this We led again spending opportunity example and that landscape time must or has that of our with Services, Gartner's recognized thousands encompasses solutions as Making transformation leverage this is the solution our all leader the for time in detection and Managed of validates one been

the tax solutions needed note, bring our They one, for of threat continue as solutions agility uniquely design our ability was to security solutions the in and we of increase winning innovation positioned quickly transition in and take premise our quickly while of security and capability Securework analytics architecture data what way. to all because the expand data a we our to a program bringing we see secured them. full to the with to complete the tune based of continually as the the comprehensive in to threat clients of are to cloud together speed. portfolio the finally, Next, progress third depth leverage we in response the transformational intelligent complexity process of reduction will unique driven and clients' nutshell, Of deliver our the cloud. We running our and predictive journey on solution a environments is with playbooks, organization In competitive comprehensive this clients and connected providing our along and develop help chosen marked ultimately ability two, needs hybrid repeated a the to capability and were speed develop, to transform formula. with and events. up needs, and to an client this our

As SecureWorks, industry. we in uniquely positioned are the

years solutions is platform. Our based threat our and cyber-attack counter foundation solutions based of data learning on a are of machine that

We velocity also our that in recognize industry. is key

the a of learning iterate. sources. will control This cyber applications dedicated leveraging will the and in our growing develop data technology rapidly meet including change across for portion spend have development machine applications, developing that security proprietary rapid of trusted access new pace new value the solutions quickening of of data high own resides. framework our the greater creation leverage for needs Given to effect security, allow partners will of we design data diverse where the to over research and and also The community a

every to to I clients best our trends in the our remain bringing emerging details. day security more to growth. protect in drive and now results the quarter is turn full Our Wayne leveraging over solutions to it committed and performance Wayne? goal and clients will we to about to fourth talk our

Wayne Jackson

revenue Thanks monthly a XX.X quarter the XXX.X and the week XX.X% or an extra normalized million, increase in million, Mike X.X% and when MRR for of X.X% fourth exited a increase good In with morning revenue the quarter, XXXX. of a sequentially. everyone. increase We was recurring

prior year increase the increase a this Our average was and X.X% a subscription sequentially. annual per XX.X% revenue $XX,XXX client over quarter,

as of results were benefits specific U.S. and EMEA reap our sales noted the enterprise both of space outside primarily Mike APJ. investments million note, up continue quarter, total grew we the to international for sales at on in last greater in the our than A other growth as contracts XX% As sequentially XX.X% revenue as from revenue XX.X% in for of year, of couple revenue strong items a consistently to markets. well the $X

have as addition, services demand to revenue for of XX.X% In strong for fourth revenues we total consulting the increased quarter. SRC

fiscal believe quarter. full XX.X% total XXXX. reasonable For a was of the in We consulting XX% Revenue historical mix for with XX.X% total third the was the XX:XX XX% XXXX, of representing remains subscription fiscal period in of revenue mix estimate retention revenue revenue versus revenue revenue.

As as to XXXX active backlog. clients have challenge we Recall a how was year. we reminder, had through in first revenue of the clients churned metric retention year. on that the and we of excludes for half fiscal service revenue only maintained measures this first Higher overcome day to the move well a the applies

performance gross basis Our margin quarter. negatively higher and compared impacted XXX In margins by shift Also, the in XX.X% last in fourth due approximately associated XX.X% the quarter. revenue quarter the points by year points. QX, MRR the in impacted prior basis approximately overall SRC gross compensation delivery better and to was XX.X% to Incentive cost severance mix by points. XX basis costs approximately margin negatively XXX was fourth

cost income statement, last invest development as to to in meet and development QX, our quarter, technologies $XX.X G&A. million needs. expense of In categories down evolving we revenue Research increased the our innovative primarily $X.X and million to operating operating clients up quarter totaled severance XX.X% year million last and XX.X% expenses expenses across to continue from in research the aggregated Moving the compared in year. $XX.X fourth our

applications cost incremental continue fiscal mentioned. in invested as this performance expense sales in the new make our expenses the percentage We $X increased to expenses of mentioned adjusted General as Mike and additional year, will compensation as marketing loss XX.X% our The framework, severance as orchestration in the EBITDA a quarter to R&D totaled severance cloud and above. XXXX to further revenue. a of investments Sales guidance offerings in to advance revenue up $X or expense well were as from well XX.X% compared of versus million last increased drove XX.X% revenue, our million. revenue as expense XX.X% million and primarily commission year expense the higher better of result quarter With of fourth to vanity we approximately quarter sales sales administrative for as incentive capabilities. X.X% last charges $XX.X of for

$XXX.X quarter foreign of in margin margin was non-GAAP exchange basis. XX.X% now for highlighted. the normalized the revenue year. $X.X X.X% highlight million compared growth the the increase on last due a the week when sales just XX net was primarily items impacted loss basis quarter in the investments that of penny. Net to Including widened Gross full to million was related an Total margins impact including a Our million last with earlier, to solutions. share leverage per fiscal extra of that $X.X compared Full year, I fourth margins negatively increased gross will XX.X%. revenue all due a XX.X% I expanded fiscal the other points $X.XX expenses loss our for was XXXX. to and of primarily the mentioned XXXX few year items from subscription-based to non-GAAP XXXX, I

net of driven was loss R&D with $XX.X growth. compared as million sales the increase loss by investments operating was for and year. million prior operating the in Our position net we This $XX.X

exchange year, a EBITDA loss $XX.X per $XX million for $X.XX adjusted to the Our $XX including for year share share the Net foreign was impact. million was $X.XX loss negative versus the per million. forecasted

year-to-date quarter XXXX. expenditures cash million. and $XX.X our to flow year $X in items. We capital invested balance $X.X the sheet to support for flow million. fiscal cash Operating $X.X $X.X a to had XXXX, fourth fourth was bringing of million cash quarter in fiscal million and on million Moving growth In in the we CapEx used

no with of million year to $XXX.X the Turning liquidity, we cash finished with debt.

was year We an recently extended also an million untapped for have $XX terms. additional facility similar credit which on

with accounts net due of end million the higher growth. of receivable receivable the contract as revenue totaled billings annual Our associated quarter. seasonality at $XXX.X Accounts as the well impact to

quarter cuts quarter recorded our deferred implementation of rate had our the share an tax to impact federal on fourth month to one expect $XX per from the act the XXXX. related of tax liabilities. fiscal The GAAP jobs rate. the as Also receivable and half our million approximately Dell of results law fourth also tax quarter onetime we've a in impact at due we new $X.XX of benefit tax lower During balance The collect we have new our of effective the of in of to was impact second primarily which tax during note, the sheet remeasurement XXXX. has a the tax the

supplemental retrospective year-ending posted detailing of impact schedule for Relations reflects XXXX its the SecureWorks the ASC-XXX and the for fiscal a using Now assessing guidance, which XXXX which on XXXX impact quarterly schedule, the FY'XX we website. Investor SecureWorks' full for related adopted fiscal of statements, section have impact, and supplemental option. X, February this To the

included As has most been Since standard. adopting indicated in over on brief the our There revenue underlying always of life was an impact the contract. recognized summary new our immaterial the on of revenue the of website. subscription

including costs will installation client However, due deferred the to lower application ASC-XXX expense costs. have sales to acquisition requirements the and certain and we amortized a of commissions

schedules, XXXX XXX. you loss approximately the million $XX,XXX, see lower of $XX.X will impact revenue operating in the on As about while is in fiscal is adoption under

to expect in expect million to loss $X.XX quarter range on first outstanding. we to and be fiscal the approximately million range GAAP $XX.X non-GAAP based $XXX average to revenue $X.XX, net both be of non-GAAP per weighted the of $XXX of we For and the share million in XXXX, shares

of For fiscal and XXX both million. to range XXXX, XXX GAAP be revenues we non-GAAP expect to in the

and average effective outstanding. our XX.X the tax expect per XX% of non-GAAP We to assuming shares rate per net share weighted $X.XX in a be share to million loss range $X.XX

EBITDA be to range to X share of Also, in net We $X.XX. we to adjusted the GAAP for per in loss expect the be $X.XX range to fiscal of expect X loss our XXXX, million.

the As so revenue full first or in growth the XXX the for I year does mentioned fiscal and XXX is guidance consequential comparing standard reduce expenses are rates the XXX basis, same. quarter losses of our ASC adopting the earlier, impact you’re XXXX on to year. whether for and The of impacts a new for our

a of adoption loss $X.XX non-GAAP $X.XX $X.XX for reduction net to guidance to includes standard. the following of of $X.XX per the the Our related range shares share to new benefit expense per

XX be to of XXXX. fourth in the MRR range million of the end to fiscal We XX the of quarter expect our at

addition, expect In year. will be million Mike. total call XX the full will we for approximately CapEx the to return XX our now to I

Michael Cote

Thanks Lien.

headway performance are trajectory. shows to growth positive our accelerate quarter’s making This plans in we a our

Our clients trust earn and day. every trust and do we confidence we us, it is fight foundational their to to all

have fiscal in positive execute forward progress momentum providing quarter. and our I’ll XXXX strong We on place, to against executive our plans. to details eager leadership a team look next further

in trusted operator it a world. space and for turn express questions. keep thank would that want to I to questions now work in every over you gratitude the Before can also if Securework Operator, please. service client allowing put dedication our for the continued our the partner members I support. they for out I to our hard their day team to of to my connected open again cyber and like for their other digitally clients line security to stakeholders

Operator

question take Sterling from ahead. We’ll go Please Instructions]. first the Aunty JPMorgan. [Operator from

Sterling Aunty

some maybe meaning with what Yeah, common in seeing giving could that they’re be the terms if to guys. what of of want additional I looking us you deployment are kind some hi geography to in with deals solve quarter around model and characteristics color larger great? will thanks you of help the start

Wayne Jackson

the Sterling, morning Good for thanks question.

managed industries, the of and to I in all ones distributed to noted most the They I to for prevention that call my contract really the us that value. to help as do what prepared similar the term have across group over industry remarks specific The of where were look asking part. don’t between solutions from different so it XX as with problem. and most multi-year referred $X response States of Most on we the detection were deduct detection the industry. remediate a they data that I the They So, us and a Europe be anything… well validate the will where is contracts United in any for were solutions wasn’t contracts were and part pretty I the perspective engagement annual for geographically they’re there well detection specific think, million

Wayne Jackson

Good morning.

subset through that of clients. very those XX services us really are a the s the So, walk client Mike large contract you different same out for differently a broken new is other for and contracts

Michael Cote

only thing add that the XX from the as probably ready three contracts it, guess a other a I probably to short long is sales as to year the cycles I'd months. of on Sterling,

Sterling Auty

Are terms total? of changes done in of then And would place go-to-market sales would are Chief the great. in how force status a pieces or in in moving one still Revenue of parts? and new to some the follow-up have year, is characterize Okay, the heading be new work there final you the done be you kind as fiscal function you're all into Officer,

Michael Cote

in then and globally, two the of sort and in mentioning of I particularly, in pieces go XX believe as continued in increase existing leaders in senior think things one methodology continued place we’ve of Geoff productivity consistent dot/doc leading the productivity one they're couple I who I is and the basis under sales and is the has have the leadership actually start were a Europe, of incremental organization, early lot and on a the that our the closed coverage we which in hope made Geoff on, Europe in and added months people QX connect the that are over forward mentioned hoping next and say focused plan of is week would all a I here. we I U.S. our and is last time messaging. and and U.S., individuals the that the to execution the us gentlemen dots progress

Operator

is question from Melissa from Our go ahead. next Stanley. Please Franchi Morgan

Your line is pen.

Melissa Franchi

you you the said my flat. thank customer relatively Great, for was base taking question. Mike,

you wondering outlined to that what return biggest the the or I'm Officer? think this could move in that new limitation what So, is a expect number given with Revenue the see would changes the to to then just and Chief base number get customer higher we growth just the you've should we

Michael Cote

So, Melissa, question. thanks for the

what the much ways. Let investments really that value different It’s few company space. me we're answer have try and We the last or don't upon upon driving of numbers annual years based been customers. the over a ACV couple operate larger in in based for, contract our is enterprise

upon have say it why the we We So, and market invest to clients and size a in an continuing reason into want client if markets of and larger increase from geography will to client maturity to end of revenue from slightly we business the that of perspective, base and important, would some segmenting the those lower a the a but may a differently do space. based perspective per quarter. were this diversity XX% needs fall small and have is in that also is market I up in our our both size we’re of medium average size you important

years size a business So, larger a a to numbers we is the small we've perspective go-to-market the in last investment have our few enterprise in a to of We and mentioned organization sales the medium of from larger base, and I larger we space. a much larger got percentage in as do clients. do client to into with want came want remarks, prepared - my still increase the

client to answer first number Does So, see would continue but your average on focus question, of to revenue that the Melissa? continuing focus expect on us I clients. and per increasing increasing to our

Melissa Franchi

greater Can color what's And comment the XX%. maybe up on client driving guess the more add just bit does. it per average revenue just up that the sale? up that Endpoint I Advanced to additional purchased portion a following Is or see on to starting little you Yes, this architecture, for Detection? that security of adopting solutions you're are like MSS you the enterprises enterprises

Michael Cote

I they're is the start solutions the buying maybe from -- answer space. more with The and more Meaning looking enterprise more success yes. us there Part solutions. that market the question more that enterprise is for would and having is interested to in of we're

sales in to as we well that. to on quarter. help as I that to their I think there America, is of North saw they, are in the aspects path about we market perspective industry all started across them improve it various in drive spend capability execution to America continue around change execution. a the that's helped still North to in -- is occurring year space. think and they're the that in from And an reducing become the ensuring more add but Equifax a become some including enterprise the breach, I so we've not quite And from on ago frankly the also fourth pleased progress progress clients have did I in lot we this on looking will set effective has can looking risk. room we we have receptivity of risk that man tremendous more our all a a of become make they that improve managing made broad our but satisfied, of

Operator

go from ahead. Please is Your Boolani Fatima next from UBS. question

is open. line Your

Fatima Boolani

that been sort of morning. to follow wanted to what curious sort Thank the taking Good you then to questions. XXX% on the a things And around bring revenue mid-XXs. of of retention do I drill in for hovering sort the you rate that’s programmatic up I'm And levels. need the Mike, to back in up.

Michael Cote

that the are works as the of clearly you a way driven goal. time that installed. take The XXX% for to calculation just a been recurring point in year the isn't at people from a the client that remind We our revenue of have north beginning

turnaround of that I the part year, off we the base we a we later think start is coming negative that hard of really this in year impact towards So, situation if have the which part did year to the is this of year. as

I go was turn the think had of back the to that sales the to up. end revenue we installed the other have the we retention rate in to order the year revenue impact of towards client get part into rate the

with cautiously the I not fiscal with sales Wayne? year clients. our this increased XXXX compensation renewing Anything you'd going with for on a had. So, And QX but that force results the just we perspective am focus from have sales optimistic sales existing we're to

Wayne Jackson

here. talked our are there of, the And couple so last cross quarters existing is two over group. Yeah, sales several to parts in sales about moving we that One talked sells clients. we've investment and about

the enterprise and mind that's as So we client. big focus to that then base space SMB But the client that well. And in the size an is contract size keep the about as a for us. migrate of average enterprise times retention also of the clients renewal rate XX within

renew cross enterprise only space. have at sell not So, it's to to place important the we for solutions the the but into in contracts we have it

Fatima Boolani

Fair E&P nice is, new I in with give relationship Chief complete. With your enough. of hiring your know an Revenue on Dell just progress. background see in us that work was can to And side update around say you our Officer, it's distribution house, what the transition a just of on that the the that

solutions that’s from it Dell from to power your leverage So, with force horse me. and level I’m distribution the curious seen or as sales you. of you’ve Thank the

Michael Cote

stiff that benefits answered sales and EMC with overall fiscal the the say we XXXX business organization the connected with there part referral as quarter year Dell getting a of SecureWorks. technologies. carriers year, in anything In has Dell the to Dell I’ve total not sell Dell for credit been and just that EMC the across upcoming saw the increased for productivity this increased they organization organization are that being change calendar the

and are clearly should jointly in and will of a positive be referrals optimistic the that from Dell continued relationship organization RSA EMC and sales opportunities Jeff sales with that. we uptick the sellers cautiously and the force So, be excited both there technology Hayden’s

Operator

next Alex Please is line from comes question your open. Needham. Your from Henderson go ahead,

Alex Henderson

Thanks.

guys bit think you and your spending that sounds and R&D and between good like getting I think highly around platform you margins leverage to G&A. hoping would the is and a platform that topline always leverage Do you margin, harder It leverage invest be and think as need line you but you through and area have you one some a think talk growth gross I marketing maybe items about leverageable and you sales sales of time you of talked you need or the where in spending gross I accelerate that have was the is to got leveraging be increases ahead just marketing. automation marketing. able on? on to an might leverage G&A a have that sounds some about like step push get where to R&D, little could geographically on you sales and it expand the to a The

Wayne Jackson

the platform, within me the and COGS. Let start leverage CTP with on

leverages. more the a technologies about ago We platform are We half. we’ve year have we of during more in invested and that effective those that invested course really starting talked efficient and the seeing and make several years last

Our gross points about quarter margin the fourth that charges increases and spite year-over-year in that basis we have. talked XX including we’ve of

those incremental helped leverage cover to cost. the So,

clients both important very to in leverage leverage, invest Again, and So, forward. the have additional our we effectiveness, on it's because but for will CTP going focus effectiveness us efficiency. we on to A, efficiency focus in for continue invest we

little incrementally that to about so invest in but we’re in well the the bit fiscal in then, we’re continue discussed a more talked CTP, R&D As I’ll remarks. we his in as and going get the ’XX in to prepared prepared to to remarks invest then going Mike platforms

So, marketing. I both of to invested function step and we were invest continue those a marketing to going leverage ’XX level for are to the and and we last year continue in fiscal from sales heavily at forward. call will Sales a invest it going at expect step,

sales reap We increase will begin to expect investments. and those to

out, the impact roll and some capitalized. XXX, right you’ll of will the So, the the is,’XX be ASC we what dollars, is think of level those level see

won't sales same. yes, but see expect will leverage investment that amount the be forward. in going the same P&L, we the the cash So, marketing in and you in And,

Michael Cote

In having is on able at and Geoff one SecureWorks year to saw as they be productivity in we QX, and position basis – this pushing us efficiency into Mike, I mentioned, increased sales and effectiveness is and be the in as marketing, existing of to a working the a across but and ongoing have increased consistent ’XX. sales -- fiscal on team to growing our

analytical looking revenue than summarize as each be new Wayne there increase, your see the of the I if but doing. it we’ll line to on at you XX%-ish sales and continue we’re making in other the expect not investments addressed type kind we’re would we're leverage go new So range should productivity and I items and be the we’ll the sort it, platform line, the and to say of R&D the should think, have us work of on of G&A in should up leverage question of I marketing

Operator

William is form next Please Ho from question go Jonathan Blair. ahead. Your

Your line is open.

Jonathan Ho

of, Hi, I customer give and from good wanted how about standpoint that existing applications sense contribution us an add maybe base? can opportunity that well with your first your a ask can set you as framework expands incremental just morning. to as maybe what the

Michael Cote

Thanks is morning. very much this for the Jonathan, question and Mike. good

in extremely continuing first because opportunity and this lot fiscal try I me to of Counter doing heading. we're what give don't year. expect of some Threat Let we're where of in and important you or We're insights, it's part our Platform a all, invest addition

the we we data, industry the about that beginning XX have the I’ll of in effort clients next in that days, alpha is talked with historical and a the data we the would and has on position the where hope in and an around a of SecureWorks they're position analytics, say be started location. as that calls property while would some we like year couple could in realized have it the last our open a to that, intellectual we’re us machine that, on be about for attack progresses – anyone And resides the would on have a ’XX that in community to that and in impact it clients that running ago like the into learning, with changing lot data and As to we it process we've in across the participate energy to experiment of the share in putting algorithm, any can year the to aligning or be but more prototype going fiscal this, as and somewhere timeframe.

Jonathan Ho

in U.S., inside be a should saw year, the it. we growth international the would of outside growth Got faster just opportunity growth then U.S? significantly we the the terms of be And the you about how expect than to rate strong that thinking this and follow-up,

Michael Cote

So, The base. U.S. outside this Jonathan, the base again, is Mike a is smaller thanks.

growth So, percentage exceed to and expect a North I APJ would the in rates. from perspective, rates growth both our growth American Europe

leaders we're markets As will they are execution the to very therefore have optimistic a and period of exceed I America American rate rates. level our North for our a that our growth who and sales growth executing time would percent planning I've we think team and as those in leadership continue general of in well mentioned managers and place been that have outside North and and have longer

to Now as I North America in a having will or accelerate fourth North are reaccelerate we seeing quarter. we area think have continue And focus said the productivity and improved America in it's for Geoff. we that, see

Operator

go is ahead. Please from from question next Saket Kalia Your Capital. Barclays

Your open. line is

Saket Kalia

guys, morning and good for Hey taking thanks here. questions my

First, maybe Wayne. for you

quarter. of You severance the the impacts the of during gave some margin

XXX quarter? was I roughly on margins. it restructuring the remind the Can impact bps were? call the big total, onetime us just in it you cost gross about was what And I'll said of how you think

Wayne Jackson

morning. Sure, Saket. Good

or the out OpEx. restructuring broken total million between So WFR $X was COGS $X.X rounded and million

Saket Kalia

That's then you, for Mike. And maybe helpful. it. Got

in look I you. you internally over that with sizable are ACV. that sense? maybe those to trying looking the don't Or those partner to with if guess is have security these a teams $X question organization. large security security versus teams are already customers were deals that handling co-sourcing at million their a The and have are are mature XX make therefore how As customers

Michael Cote

or or appropriate in the them help help ensure and sort ensure of We it at -- relative a manner security with best XX of and us of at large I that large look a $X large would me, in and those digital the do group. In contracts only their a not to that are some organizations, and basically sophisticated are or session we for opportunities complex going a million security meaning look have some them both the clients When solutions internal cases of you all organizations to I'd their following to they some deploy these say they possible. would me Most have smaller those do say them So, security of depends, larger have better. deals an complex -- and have can resources it's larger less transformation say internal partner them solution organization it term, organization. fair for us size through and me. the is say a looking change them internal made security smaller and of and

responding about measuring diverse transitioning spending measurable part industry it's whether security the lot the see money of in the the above internal or that that in intellectual way internal resources cases, can ensuring reducing in our their and gaining with that allocating XX their all but of seems think a sort to is demand help a in to where I some that in they some cloud. more to a base property risk really have they case be help -- from group, I impact. and and there are talked had a of So, perspective client And performance before changing from they their organizations this money of them prevention, detection, really are

Operator

[Operator Instructions].

Operator

is Markets. from your Please Matt open. go Your next ahead Hedberg line question from RBC Capital is

Matt Swanson

actually we’ve after this down Can kind bit so chasing Matt MRR the quarter and on successful of you last It's happened little growth that Swanson seems Matt. like all been just the guidance during the it's lowering a quarter, was drill what thing quarter? for that in it Thanks. on year

Michael Cote

So, Mike, what is for say I execution. was question thanks quarter would this happened Matt this and the

clients market where the We on have and messaging been well in where the invested solutions our people, fundamentals up QX. and organization, those The selling on productivity, -- and ended we We sales deals. clearly in there. we’ve possible the executing we is focused covers, methodology opportunity in and focused renewing

Wayne Jackson

productivity carriers, and last great came ramped focus MR board or [indiscernible] forward to lowered more we on it Mike of came for one play. had actually the expand force did really in around on see all [ph] going sales comments, in last we’re guidance number came execution pipe. year but the quarter play was centered into some to was the but a we thing the strong right QX productivity had product entire We earlier begin going across and to together. up into QX his tenured the it You’re sellers of come see that

Matt Swanson

of but a specific around seen circling any in wonder GDPR? sounds about uptick just is Europe companies of back if then And it great. like just lot I the some on That’s talked execution conversation you’ve

Michael Cote

all a helping where have compliant in discussion is in and perspective clients role that involved point starting Mike clearly GDPR from we was a it can a a again, and fully perspective. we with in conversations we from GDPR advance are which will tested compliance the and play GDPR our of be

do the I So, was that driver it a of quarter? think sorts in

Operator

over time. further the at no now the are call presenters. back I to There questions this turn

Teri Miller

us We hesitate look don’t your joining to early call today’s up. not the first for Thank follow if and you questions. a Q&A to quarter us get please support in on call sections, questions for and do our June. of for operator. again out to all Thank forward appreciate to on you, reach your we your

Wayne Jackson

Thank you everyone.

Michael Cote

Have a everyone. Thanks good day.

Operator

Ladies call. and that concludes gentlemen today’s

all disconnect. now may You

SecureWorks (SCWX) 28 Mar 182018 Q4 Earnings call transcript