Shares in cybersecurity firm Secureworks Corp. dropped in regular trading today on slightly weaker-than-expected revenue guidance.

For the quarter ended Oct. 31,  Secureworks reported a profit before costs such as stock compensation of $1.2 million, or one cent per share, down froo $6.7 million or eight cents a share a year ago. Revenue in the quarter fell 5.6%, to $133.7 million, in what the company described as reflective of a continued shift to a higher-margin business as legacy products decline.

Wall Street analysts had been predicting an adjusted loss of six cents per share on revenue of $132.88 million.

Highlights in the quarter included Secureworks Taegis, the company’s cloud-native extended detection and response service, growing to $123 million in annual recurring revenue, an increase of 20% over the previous quarter and up 193% year-over-year. Secureworks ended the quarter with 800 customers on the Taegis cloud-native security platform.

“The strength of our Taegis cloud-native security platform is generating strong industry validation and positive customer feedback,” Wendy Thomas, chief executive officer of Secureworks, said in a statement. “We continue to be encouraged by customer reception to our business model shift and are proud of the expansion we are seeing with Taegis adoption.”

Secureworks is predicting an adjusted loss per share of seven to nine cents in its fiscal fourth quarter on revenue of $128 million to $130 million. For the full year, the company predicts an adjusted loss per share of between two cents and breakeven on revenue of $535 million to $537 million.

Analysts had been predicting a full fiscal year adjusted loss per share of nine cents on revenue of $538.7 million.

However, a very slight miss in full-year revenue may not have been the sole driver in Secureworks’ share drop.

On the earnings call, Thomas noted that the company had announced to customers and partners the majority of its other managed security services would no longer be sold as of the end of the fiscal year. She added that Secureworks would also not renew contracts that extend beyond the close of the next fiscal year.

Although Taegis now accounts for the majority of the company’s revenue, the legacy products still account for a sizable chunk of revenue. Thomas was upbeat, claiming that customers and partners were switching to Taegis, but with overall revenue already dropping in this quarter and the previous quarter, investors clearly expect the trend to continue.

Shares of Secureworks, which reported the results early this morning, fell more than 5% in regular trading, to $16.04 a share.

Image: Secureworks