SCWX - Earnings call transcript Q2 2019

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Operator

Good morning and welcome to the SecureWorks Second Quarter Fiscal 2019 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 webcasting 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 to turn will I call Ms. over Now, Chief Miller, Vice Officer. and President Teri Accounting

begin. may You

Teri Miller

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

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

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

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

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

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

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

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

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

Michael Cote

year, efforts, with in of very to million We progress results QX monthly areas. million. $XX.X and for $XX of pleased and our demand quarter another the results our for cash second strong financial on XX% to in a flow fiscal million, expectations operational I make recurring morning our quarter over year, revenue clients, million, sales nearly adjusted the This ever leading EBITDA of comes thank prior have place, opportunity to the of objectives. record up SecureWorks above XX% I greater made show And will With confidence heels on quarter that significant with sales entire sales our momentum our revenue everyone Geoff was second industry executing to improvements our quarter the we complete on their and first protecting am we've many which would now of up even the which and progress over year was half and build Key this achieve We’ve like focus go-to-market we've to had improved record $X operations to fronts. our year results best continue for continue highlights market and leadership, QX. significant Teri. is quarter for $XXX many joining earnings you, Thank our Haydon's XXXX team in improvement. we I you in our motion continued us leadership of see include: and velocity. for our with the and future. sales our thank call. on second

total deals sales resonates increase with XX% in quarter the sales number grew basis. this broad of highlights of XX we than value $X a quarter, contract above include: contracts Second second quarter XX annual and industries our a in contracts XX% total on geographies. well and a clients year. which closed increase proposition deals The sold value across the were XX% value greater million, we of over the that represent last that year-over-year. these In seven-figure represents year-over-year up indicating clients the quarter distribution million American $X signs a XX% deals, of North

and right sales making still Geoff in on right to see focused accelerating growth the our markets significant the the our on this we in continues Although teams sure domestically. we in North room important right have America performance coverage opportunities. talent focus improved, for market,

business strong overall XX% with quarter. greater Our this revenue now again our represent year-over-year international operations revenue. remains than growth XX% of International

to management continue leadership, the business. team, international operational our execution growth and of industry drive GDPR-compliant Our status,

IDC leader quarters MarketScape we've and security in where in One a strong Asia-Pacific player has separate in other our is managed a region experienced services. the growth recognized the publications. recent in fact, services, operations, lifecycle In MarketScape two threat major is the

small response holistic several launched priced of detection and and and businesses, security MDR We second or security prevent in detect that detection We their solutions. are comprehensive a have also detection launched The with predictability help combines has for creating expand team a The asking scalability. and giving technology streamline offering, enterprises managed functions. our our and for and quarter partner. progress our a all looking solutions medium-sized recently package made to to a the advanced with simply package lot of and market trusted response, package, by security that in MDR a targeted simple solution security the we solutions of response that been approach and package offering, go-to-market value-priced form has a the expertise client

one of pinpoints enough the Service behalf. recent clients Managed million in large note also allow security action offering annual MDR offering respond industry recognized pipeline with investigation, the the two is building contexts their an on timely in to have capabilities to take while contract our a gives only to as true were forensics. results. Providers. over and Our SecureWorks Forrester this a recognizing the threats, analytics also has offering and two threats available Security fuel that clients right or across recently quarter, as by remediate We burden to leader providers This reduces that proprietary their value the impressive powered just Cloak taken We excited MDR months for comprehensive was Forrester safe MDR security about endpoints, second network, closed and the our really keeps of Wave am future Red approach of $X I early in cloud is during sales. full-scale deployments. Global us The

market. to led We the capabilities innovative record bringing of strong technology have a and cybersecurity track thought solutions and leadership

initially the investigation. the advancements developed of and We the last expand the engagements when One Endpoint regardless or expanded of to Behavioral advanced of uses began key added our needed Agent, Cloak has Red effective support the deployed. believe an use Cloak monitoring for as solution not of Cloak are the Red agent and internal use Analytics telemetry of and year analytics Red to analytics capabilities server we our commercial for the Cloak these did greater hunting to our incident our with threat there Red been proprietary was products introduction and hunting the analytics. provide response over

can just and tools, VMWare's [ph] event in past capabilities. Red VMWare cloud see AppDefense the part family. completed excited development to program. with offering. of VMWorld defense the that best-of-breed our partners unexpected new with Red of client's Cloak showcased leveraged We the across to to which the work providers. the virtual program growing on analytics, match that SecureWorks By through infrastructure will define member attack superior surface our vSphere-based with our opportunity a be have clients use profile. behavior. and At running we virtualized products a partner effort the on Cloak application announcing our the risk protect Behavioral Intelligence Technologies Analytics also just embodies existing working and practices focus app power best I solution our number Cloak application to We applications detection we of leverages endpoint technology new response Red solution detection we've our calls. client Dell SecureWorks launched environments. partnership this the week, policies can adding defense on XXXX Cloak advanced provide I'm Threat about the managed to to of reduce analytics As forward in great look combining extend of Red future

manage The their used based to risk, industry, their one combines security have ISO prioritize a is risk current addressing a focused a on these it holistic We to executives today's cyber goals Wayne our to second tool targeting organization's over that about be help us create to frameworks in security approach performance and quarter requirements maturity capabilities to and value. turn XXXXX It their protect organizations believe to of help is to journey. for as will a thought leadership an model, domain, organizations a I and Using profile. As our security more proprietary this in through the operations risks their practitioners risk we detail. model and with activities, assessment evaluating help model talk consolidated business requirements. NIF boards areas now in cybersecurity, analytic organization's most allow and the from help our well-known of critical by to such valuable and understanding Wayne? better and security organizations maturity a easy-to-use improvement. deep and to can leader have created capabilities, business evaluating pragmatic control approach provides their the meet a

Wayne Jackson

good everyone. Mike, morning, Thanks and

let of me Before details, get very a good our the second quarter I say into that was quarter. FYXXXX

revenue leverage, positive the for record addition quarter. and generated growth, MRR positive and improved we $XX In flow cash of double-digit from cash we flow and million sales operations our free to operating are

a X.X% results $XXX.X Moving sequentially. million, of Revenue increase of QX, to and total increase FYXXXX. on the QX FYXXXX aXX.X% over to

security last and to per in include: we increase of risk, average XX.X% revenue XX% solution a the project $XX.X mentioned over a in gains investments and leverage a with XX.X% revenue of year Our year prior our second with able year-over-year component this A This as subscription greater advantage as new mix sales strategic revenue $X important quarter versus remain than services. a Revenue similar the of at deal versus MDR an win city X.X% existing a year. a an comprised million Mike deal. the level were XXX% into XX% exited next global in retention the we a team. financial this quarter client's consulting continue signed diversified capabilities to the second IR examples the the Sales solution. began for leveraging the XX.X% in was is quarter, to a see for for municipality. the the QX. quarters, prime annual We We dollar contracts and agreement of subscription response we last $XXX,XXX client solution the based with we grew foundation an engagement sequentially. was two-year notable We productivity A large comprehensive quarter MRR our second of as one-year up example SRC our the in the $Xmillion QX are million the quarter increase were for of Consulting year. XX.X% over made earlier the success our deals an of company. first of subscription insight clients. anticipate prior to increased that total to quarter couple period increase and we large $X.X the with of will our and XX% into with results on ongoing incident of revenue consulting notable gained several revenue in our XX% million, relationship example and total of year-over-year, convert security The

have from year. reflects is of clients revenue the well As year on revenue backlog. we maintained we measure retention had This the the day beginning how a and subscription metric excludes reminder, as of the first revenue only

revenue of was percentage quarter, increasing revenue margin business in XX.X% up the cost as year year-over-year of growth is on second of revenue revenue, consulting fiscal the mix and of revenue revenue. $XX.X and the total Prior UK, the XX% the margin of or basis, last quarter. Gross million, of million, or $XX.X Japan. total totaled Middle the a quarter to quarter On XXXX, $XX.X in related of first contracts For year compared large overall operations. to lower outside US from XX.X% mix grew the to East in a and or the margin consistently our million XX% second with of gross XX.X% of revenue strong gross primarily

Moving statement. down the income

Our expenses $XX.X million million, second compared with quarter totaled $XX.X last operating year.

XX.X% meet While increase in dollars, in basis an Research as our quarter, our expenses of invest % points in development to XX.X we a evolving increase up year to decreased continue needs. expenses as technologies clients' from as continue OpEx revenue year-over-year. operating percentage to we XXX revenue innovative the of absolute to and leverage last

XX%of from Sales to We framework down in XX.X% quarter as and organizational in fiscal previous this improvements made continue automation totaled $X.X as incremental productivity year. will year. advance last million and We in see in the make changes prior of R&D gain will have were marketing from applications EBITDA investments approximately we continue investments expenses revenue, our QX positive discussed we XXXX. last million additional in to expenses year, XXXX calls. We we compared fiscal administrative to new relating $X leverage to in further of that loss half year anticipate G&A to last year. second a XX.X% the and revenue, compared to of compared XX.X% had some with General

for loss R&D net loss narrowed just the per million Non-GAAP on net last from the the also as offset investments Our margin $X.XX. share year, higher I $X.X quarter highlighted. revenue to $XXX,XXX increased was

cash the an million QX in balance and of good Based quarter, second provided cash last by flow million quarter in million the to compared items. on flow use finished Recall QX annual and quarter cash operating year. from Regarding sheet of operations provided compensation. activity, improved by with that collections cash quarter leverage of negative was $XX.X is first $XX.X usually with the $XX.X cash in operations operations $XXX.X due primarily payment million. and in cash We the

the to quarter. XXX $XXX.X at CapEx the from receivable at million of quarter. net first end quarter. million the second accounts days in XX million totaled quarter, the in was in the Our $XXX.X the down DSO decreased the from down $X.X end prior quarter, of days

Now for guidance. FYXXXX

we of earnings, with second large up for a the the renewal end client was QX, at to fact call announce FYXXXX the During disclosed contracts quarter. our that

to very $XX guidance this and the pleased to offering mix MRR periods, results relationship client. run have revenue the We new our the million of of the million. historical solutions for range which agreement, be be expanding $XX of than will are to may our lower subscription Under a subscription consulting and different between rate in extended

below more per As leveraged impact new incurring relationship. ranges our in the cost solution with and to The third in changes approximately be model, reflect we the anticipate quarter. of timing mix reorganization delivered estimated fully expect the this share also a we guidance of $X.XX

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

have XXXX now We the and year full updated guidance fiscal our anticipate following.

$XXX of million $XXX We non- GAAP the million. range and expect to be to in GAAP revenue

Our improved And share. with continued QX $X per range to $X.XX net in of million. our to in to momentum. EBITDA the compared adjusted our be and performance All measures loss revenue non-GAAP share EBITDA guidance be reflecting $X.XX per and of prior million higher to range $X loss the sales

per expect to to $X.XX. loss share of in we the $X.XX GAAP Additionally, be net range

XX%. the we FYXXXX rate the first of tax purposes, half for estimate second overall be is modeling will and approximately that For combined benefit the in with year the tax in XX% when the about half, the benefit rate

of of MRR earlier, the the fourth million be in As range to noted million to $XX we XXXX. quarter our at expect end fiscal the $XX of

in we million provided $X positive first-half operations up anticipate tax this full cash the the return will monetization now be will million We even the receivable from the the from Mike. strong million fiscal have XXXX. the flow year. I by fiscal of without Dell activity for $XX of and to in range we flow XXXX, cash cash expect in be $XX will to of call that year free to We now quarter collect roughly fourth

Michael Cote

Today marks SecureWorks' that works employees in I'm year stay Wayne. honored hold to of call actors a clients. our and earnings threat Thanks I'm as my to and and my of XXth to passionately this protect lead CEO. team ahead position XXth

positioned the We industry. in are uniquely

forward appreciate such the SecureWorks progress to quarter, work evolving our recognize landscape. on a progress stay quarter. next we quickly much that with behalf details our pleased top team, providing On look support. this and While continued interest further remains threat of your on I of I

for allowing to I the express open of to lines their my our partner. for SecureWorks And team over as of clients all to it you the please. questions serve now turn I Operator, trusted gratitude dedication the and if of Before our work cybersecurity questions, for hard again operator thank want members.

Operator

JPMorgan. our Auty Sterling take of first from question We'll

open. Your line is

Ugam Kamat

Ugam is morning. on This Sterling for guys. actually Hey, this Kamat

So, activity of in first where are for consulting? are we this you consulting seeing an demand the of specifically What the are of that the you seeing terms year, areas half in seeing. are pickup uptick the the

Michael Cote

Mike So this is Cote.

consulting a up bit. little Our picked

it's business revenue. was in and picked I’d for where along incident the more where greater response -- solution or it as looked holistic-type space, a I'll that solution. of I'd X% as subscription work, we say our our a holistic in And really have enterprise solution X% our some ties larger space large focus say think percentage clients say consulting enterprise enterprise I large to increased up well from a-- a the more with tied

Ugam Kamat

the Got at demand it. for How we it would lower is that below services? gave much of guided say you MSS had And I look full the increased ongoing if MRR that the actually attribute to outlook previously. would versus a you churn what year, you for

Michael Cote

The So it demand in is to as and those of Cote. I is doesn't wouldn't I this phrase either those would, high mentioned. two. we of Mike relate manners it either

The leveraged business. years. many MRR solutions and move is firewall was more into As that of had contract in prepared to really having those for management company. consulting large model I them remarks, key we remarks services, goes in our a It subscription QX had instances, and we've we value the related to his for after client record history many the what to refined referred best add mentioned Wayne which in had we my And in in we've sales QX some the did that solutions. prepared the service not but a was

the in related the that of change really it contract. to makeup So

Ugam Kamat

of just Got is nature? are we any there squeeze any question that one -- SRC is seeing, recurring you. of revenue that in, small one could And I last uptick if in the a

Michael Cote

repeat sure I'm Didn't small us you question -- please? a all, not is. first the for question what of Could

Ugam Kamat

Yes, sure.

like saying a So quick very question. I it's was

the one the like that are recurring So, I --in is seeing, time it or you in like is SRC nature? that was sense any of uptick more

Wayne Jackson

are this contracts, have SRC Wayne. is we that revenues mentioned longer-term Good So is related before. we've do recurring. to our and morning. Relative that of They SRC, some

Some of three-year contracts. those two those --some are to of

yes. is answer the yes, So,

have We some.

Michael Cote

business, looked things Let year, than much add, said, Strategic it not Wayne is long-term our Mike response is a just overall vast me majority longer-term is shorter shorter clearly for SRC, like be at again. the majority longer it contract just to bucket, the would is to if meaning most is incident But part of contracts contracts. year. It you of in a that this add Consulting Risk but transaction -- the what

Operator

comes from with Sachs. of Borges question Goldman line the next Gabriela Your the

Your line is open.

Gabriela Borges

a mentioned does the follow-up Hi, do good managed from maybe the manage Thank security services you SecureWorks? bit next-gen side. itself. versus you’ve my a buy, or to the could endpoint services question. about Maybe Maybe remarks third-party the adoption talk endpoint on us from a little process between does buying, on endpoint taking you for some threat adopt And propensity like of how services they the advanced provider morning. decision start through just walk decide the Secureworks provider impact for prepared in Mike customers' commentary that maybe the of next-gen customer technology technology. a technology Thanks. when How to next-gen

Michael Cote

So, there of a in different questions were there. couple Gabriela,

I'll you one, for hopefully all to miss answer come So, I back please If me. . them

there's touched better endpoint partner a I the is the can first prevented. that reason world and couple prevention But, as in thing we be side program it. in the basically have we think and not first on what detection, There's different there's everything aspects of of the is of the prevented. found know, all, will we the what was be announced the you endpoint,

looking our rather the of there. and their and bad in a them to tool clients ensuring got involved to happening, simply on just for lot of then putting a And that hunt and network to the the can I'll say that a you've respond periodically ensure for out in get lot becomes network handful detect to So ability response help we guys appropriately clean. approached to than have us process that is Effectively, – using hunt. analytics then question our us what's or the a

a done across network. the hunt initially the and realize their marks the to on network, prepared the perspective what's is models bad the may I do mentioned incident taken as us analytics is threat to response clients, as said detect ask of somebody of we've engagement or targeted I in was an use in from lot going which response Cloak detect outside sauce incident what where Red So secret the in that to our on and a

So we the partner and of partnerships like it's on announced that have the with the endpoint much Carbon today program, Black. one front we

to We’re expand we analytics can apply ability on where going the network to have our their behalf. look to to their endpoint and technology their on hunt

So, announcing marketplace from we've we're some of a and seen for forward that about the on I of the excited strong be showcasing sort this Did your touch things demand the opportunity and future. to in questions? look we'll the

Gabriela Borges

Yes.

been us that relative you is also of back, implies be bit deceleration taking you that to which up explain that's you renewed. a for just large why step large contract? quarters much. puts XX% XQ. is And on when the that very Understand quarter. MRR of Thanks. for takes one the it it, MRR I contract Maybe adjusted and Could because a my one just follow-up this thank even delta would the decelerating a covers to outlook the for little put between think Wayne the last

Wayne Jackson

Correct.

renewal flows little and a the million, $XX that guided quarter based the million MRR on mentioned bit have reduce ebbs we MRR, and our for the really, year rate. side. and we for earlier, the we just Mike as quarter-over-quarter So, sales bottom $XX

we So look in -- when bottom but love it full reduce really just we the at the to the same back year, end. the top for

Operator

next comes Ho Your line question of Jonathan Blair. from William of the

open. is line Your

Jonathan Ho

offerings little good into as delve guys well looking Can that Hi, bundled rates maybe potentially of sense as impact ASP give win bit potentially maybe we you wanted I the how new you package to at just a offering? described. start when a morning. the your us would that

Michael Cote

is question. this So, appreciate Mike, the Jonathan,

the because other gone what win On package I for And the easier reason for mentioned more have also comprehensive explaining an been CISOs easier the to historical gone as it's it's that's to rates were. sale the type have solution. and buy, win cycles up senior it's the to they're no it's our management it's date. rates solution through a team clearly and up cases bespoke because board. have X.Xx board up where a explain been And not ASPs their shorter to

Jonathan Ho

Can the is then talk about how of driving you in year? that what's international strength a the Got bit as little it. up. look And sustainable we at follow just and course a the

Michael Cote

So Mike question. or Jonathan. The Thanks things. for for again few really a is the now. driving international we manager it we leader that is sales of this experienced in general is that's last combination that a years few have region hired the been strength The in the

the seen. I of are earlier job job. I we're is and the the a providing mentioned tremendous to a operations think there he operating markets. which helped Asia-pacific market And market. in clearly we the Europe, America that Middle of there do being large the has continues demand those positions throughout a done is Asia-pacific in --the is is North And this but those got good largest clearly that in GDPR- From I in in an perspective, compliant, say market, clearly market. But value Japan. we've in would are --as is the is we and East leadership

well investments Our and are execution. our working

Operator

of Rob the Owens comes Capital Market. KeyBanc Your of next question line from

open. is line Your

Rob Owens

was in larger as three and that customers? or Yes, actually there of like one different think terms you in a good count sales. velocity Is curious of the increased from morning. some question things gave deals I terms with customer only success regard counts to the seeing customer customers just Question don't you're in that. count. that record And I'm with of coming and around

Wayne Jackson

Rob. --good Hi, count. customer I'll morning, take is This take I'll Yes. the Wayne. the

XX% mention space. in the but So focused more did the increase ARPU didn't we we and it with about about more enterprise on was before. year-over-year as we what talked talk We've that

see Q this down to actually customer we in rounded the later today will the will quarter file You X,XXX. that count

Michael Cote

X,XXX

Wayne Jackson

keep X,XXX I X,XXX, sorry, that. from saying I'm X,XXX.

there, but would down again our address So XX% to that. we've enterprise I year-over-year bit the of is shifted rounding a little how ARPU focus,

Michael Cote

investment the Not as the perspectives enterprise enterprise, shifted from about. in to growth talked increase we've

Rob Owens

guys at think Sure. with that look getting that larger as you seeing XX% about value customers we bookings should And extension total that longer about to then? quarter. contract enterprise deals? talked duration I to growth --is with that that that Is how you're Are in commit a you record

Michael Cote

would It to we've three larger is growth are tell customers; contracts as term $X year to in perspective, seen I the most the be two From going over I a larger mentioned million. Rob, deal a term. clearly, a XX you of

term we've the we think few of bigger I from five-year ones prospective. a negotiated got a

Wayne Jackson

right. That's

Operator

Your next Capital comes of of from Matt the question Markets. Hedberg line RBC

is line open. Your

Matt Swanson

taking made growth this you Yes. Thanks guys Wayne, already you investing to a about MRR the thinking for about How Swanson profitability my and do investments but on investment margin now? feel kind versus Matt. last capacity? year. back guess how for right Or Matt really you I are in sales revenue you've looking billings made of solid for also is quarter is for questions. This

Wayne Jackson

So, Matt, morning. good

and for we're gross marketing we relative talked internal we investments sales made the as think growth as From external a we clearly, revenue both well margin perspective, quarters, group. solutions. margin, as still to investing versus-- solutions, I in versus the about several

automation and in help investing are We to drive all orchestration efficiency.

see discussed over So we'll quarters. the the we've that improvement term that long margin

Matt Swanson

international some trying US. regions, domestic the bit been update doing about And been like better, bringing and a the gone? things positive some in take that It how that's on them then you've you've Thanks. execution has seems to just the talked to of before

Michael Cote

Matt, So, Cody. Mike

clearly months set leadership say, he's X our Geoff to The showing the opportunity. groundwork under and there's that are we've sales the made global XX large last, organization. a Geoff that correct. You're changes Haydon the over as runs let's

-- pleased leaders all a leadership We almost our that marketplace. --I'm sales demand of to pleased increased not strong that strong productivity have global team And in say we've and continue would will the place And increase. seen results the satisfied I'm but all from with our out but building of perspective, not in are productivity the perspective. I productivity, in the satisfied will

Operator

Stanley. Melissa from of comes Franchi question Your line next Morgan of the

open. is line Your

Anjelo Austria

Austria Melissa. at to taking Thanks Angela is deals large for just want This question. speak you my to in again. for Hi. I

a of I of large greater double-digit guess baked words quarter other the think put to in $X strong forward into your deal does looking targets? million, deals are as about that And compare this forward, how into expectations? is level Another than we

Michael Cote

So we more see in enterprise pretty I up invested consistently this Mike Cody. I And and large have let deals months more a traction to would which the say will see clearly well is XX was-- to heavily about ago expect - be continued enterprise to We've pleased year mentioned or remarks, me million of and that space. going we the prepared maybe forward that traction verticals that and And distribution so across and enterprise my begun back will space. some deals, good large a it in in it was a space, clients. continue I we $X was over in

$X bigger $X whales rather still chasing So plan. in we contracts million We're in are plan grow will We and million a than a contracts continue our area, value that deals. around move support pleased would some I contract there product it. that was let's the that annual about will year, lot and if in a our to and but be that be some got a say more can

Anjelo Austria

modeling where that the high a or raised EPS Full-year QX. That's not you. just big on we Is the the Obviously, end. at reorganization at And that EPS thank of but just taking account it, costs question. incremental Got end expenses guidance beat helpful. bottom a weren't is quick before? the

Wayne Jackson

it's full $X.XX year related the it, to as in QX, and You well the it's flows that reorg. $X.XX got in

Operator

of comes Boolani next of Fatima line Your UBS. question the from

is open. line Your

Fatima Boolani

excess of interpreting up delta growth how revenue in the the follow about Thanks contract should be may. both and questions. and also taking plus even a Good if XX%. both in I values maybe Wayne contract you between everyone. growth you, and value the I'm I and Mike, talked curious XX% have total the both MRR growth, for the strength the for they're and morning, of then

Wayne Jackson

The we to year guidance So of growth we've basically over assumption about you $XX considered seeing. two was guided sales I improved rate, in that renewals. $XX guidance and of that $XX what last but anticipated. the revenue included the had growth which for relative the to MRR, million we if each it's know we're impacts million comps to earlier. the in full think that the an now the million to renewal $XX quarters, new million was again MRR, The sales year-over-year, revenue

Our the with renewal several rate quarters. in line for the year-to-date is pretty much last

to same. anticipated about guidance the the Sales renewals So were begin. in MRR

Michael Cote

talked or the --wasn't churn clients have but of record be I got to clients clearly. the that and be understood add things year. or question And answered what company try would subtracted was I service buying start best wasn't different, when in basically it business of me incremental your a that sales sales I us. is in the record Wayne sure the sure current the growth. each in leave And and let I will that sure we most point may any was QX a history base. QX one because think Fatima, the the had because you've I revenue the had, to be added that I about Of think wasn't business to we've and sales that something the is recurring of company is it But we with be the that we've the of that lose will will be mentioned churn added the history good that to QX

added it's base I gets So way business, the to that of we're because we a recurring have. the revenue subscription-based the that think

our make or So the the that revenue XX% sense? number Does versus growth reason of a is XX% growth. sales disconnect between

Fatima Boolani

for cost very And clear. that. Yes. Wayne. on maybe Thanks That's just then front, the

that remarks it the gross starting in a on transact and bit you push larger a in that up helpful. the flesh bit. if that be And reorganization just as very Thank you their can little you. scope a the quarter larger and pressure mentioned would understand to of follow clarify just prepared costs little deals, as to out is You margins. wanted of I comment

Wayne Jackson

Okay.

the So the the contracts. in first two large enterprise things enterprise, see contract. to with relative --with We larger

of many and margin. bit contracts First have generally is, And consulting combination little consulting. a with subscription lower a of comes these the

value and then item. pressure company that assessments pricing So for to we some make larger the that's the do the the one we for see client. larger our contracts, based our brings to deals. And And on

relating pivoting a that's --we to. were need So out delivery that then a little of what And services the was shares in had to costs but the that contract. we subscription we to long-term combination take both restructuring, consulting. some the And have a $X.XX per leverage well. we anticipate related model we'll more, our pivot, as will and to that We contract

Michael Cote

reorganization that is I clarity think in QX QXevent. $X.XX the other that is event not a that thing a for though

Wayne Jackson

Correct.

Michael Cote

gross can in value the of And range a margin, we're we're maximum Near-term, orchestration or gross and add to over margin work our our on to improve long regard greater. of touch our clients. focused offerings to doing XX% believe target the still with automation time. And we on lot efficiency that to

Operator

next the of Talpaz Gur comes from question line Your of Stifel.

line open. Your is

Christopher Speros

Chris Spiros Gur. actually Hi, for on is this

competing endpoint program these these end Cloak how launch the you point players same this you these with while key against in quarter. partnerships talk also the space? players about the of partner noted You Red Can balance

Michael Cote

is this. Cloak you the a now. the Carbon is the value partnered can And capability. of Red from analytics partnered the So, We Chris, in And Cloak of have I'll example give for we most and aspect in the years detection -- Mike where with Red proprietary We this Cote. many analytics. an marketplace behavioral Black of

mantra us to each So an work the excited the our a did people of And people actors in fashion. us to have to various other in threat spectrum clients take partners to security perspective of in I a -- that clients, the matured, starting very strong to our And frankly think endpoint that it's need I them this to about a fact our competitive the best together am from we use coordinated in players holistic parts most If the a together product instead to and other that as been has we've and basically viewing the with tend side from market that actually are a I in support frankly, opportunity our the clients. are product in instances. the to and of we've sell fashion. Red that I work to intelligence best And attack our do use better have quite are say thing am manner partners breed is work we here. really with where realize complementary the industry competing perspective, what's well we in Cloak that on orchestrated of the endpoint a area directly marketplace quite the and to the that solutions or the market I'd maturing clients and larger excited with and of about to the a manner, industry trying had on area. process in leaders perspective. clients, And asked which don't other those need touched us the same we And approached as interest has similar have analytics the a found our have in there our think I demand network point components. the from had we secure applying found for

Christopher Speros

color. this I touched revenues profile margin the potential remain line expansion gross great a on been the should has in going for top similar about of How forward That's the to the prior near know SRC term. but in near we the a percentage margin the gross expected term? at with think And and through call,

Wayne Jackson

Yes.

the focused We're also our to but move on maximum Long-term, just Mike direction talked provide like about earlier. we'd it's I in said something to still we're making and we expanding clients, think that margin. value back it margin us provide that see the investments will the to the help go. that

Michael Cote

to is in last I I think just our attention question. Mike and want interest was for their and This that thank So everybody time SecureWorks. Cody.

coming Thank day. very you. are the the in great We pleased end at Have we third report and with to to excited quarter had the quarter months. a you of

Wayne Jackson

everyone. Thanks

Operator

call. today's Ladies that concludes and gentlemen,

time. this at disconnect all may You

SecureWorks (SCWX) 5 Sep 182019 Q2 Earnings call transcript