Secureworks Inc.’s share price dropped in trading today after it reported stronger-than-expected quarterly results but posted guidance that failed to impress investors. 

Nasdaq-listed Secureworks sells a cybersecurity platform called Taegis. According to the company, the platform analyzes more than 470 billion cybersecurity-related data points per day. It can spot malware across organizations’ cloud infrastructure, employee devices and other technology assets.

Taegis also includes a vulnerability detection tool called Taegis VDR. The tool can map out the systems in a network, scan them for security flaws and then prioritize those flaws based on their severity. The third component of Taegis is an offering called Taegis ManagedXDR that enables companies to purchase the software together with managed cybersecurity services.

In its second fiscal quarter ended Aug. 4, Secureworks’ revenue dropped to $93 million from $116.2 million a year earlier. The consensus analyst estimate projected $91.33 million. One factor behind the sales decline is Secureworks’ ongoing effort to refocus its growth efforts on Taegis and discontinue its other, legacy cybersecurity offerings.

Revenue from Taegis increased 55% year-over-year in the second quarter, to $66.4 million. That sales jump was partly driven by the 500 new customers Secureworks added to the platform’s installed base. According to the company, Taegis is now used by 2,000 organizations that on average each generate $135,000 in revenue.

On an annualized basis, Taegis currently operates at a revenue run rate of $276 million. That’s 37% more than a year earlier and up from just $33 million in the second quarter of Secureworks’ 2021 fiscal year. The company argues that there are more growth opportunities ahead. 

“We expanded our Partner First ecosystem this quarter with global, market-leading partners, increasing our scale and market reach to further position our business for growth,” said Chief Executive Officer Wendy Thomas.

Secureworks moved closer to profitability during the second quarter. The company posted an adjusted net loss of $8.6 million compared with $11.3 million a year earlier. That translates to a loss of 10 cents per share, which is significantly better than the 15-cent-per-share loss that the consensus analyst estimate had projected.

Last month, the company announced plans to let go 15% of its workforce in a bid to lower costs. It expects to incur a $14.2 million charge in connection with the move. Six months earlier, it announced a separate round of layoffs that affected about 200 employees. 

Secureworks’ expectation-topping quarterly results were partly overshadowed by the lower-than-anticipated guidance it issued for the next quarter. The company is projecting sales of $88 million to $90 million for the three months ended Dec. 1, well below the $96.6 million that analysts had forecasted. Its stock price dropped by more than 7% at one point today and is currently down about 6%.

The company estimates that it will end its current fiscal year with annual revenues of between $360 million and $368 million. Secureworks expects to generate the bulk of that revenue, $268 million to $264 million, from Taegis. 

Image: Secureworks