Shares of Secureworks Corp. closed 16.4% higher today after the cybersecurity provider posted fiscal first-quarter results that topped expectations.

Atlanta-based Secureworks generated $85.7 million in revenue during the three months ended May 3, topping the $84.2 million that the consensus estimate projected. The same time a year earlier, the company reported sales of $94.4 million. The decline is the result of Secureworks’ decision to wind down a business unit focused on providing managed cybersecurity services.

The company is shutting down the unit to focus on its flagship Taegis suite of cybersecurity tools. According to Secureworks, revenue from the product line climbed 10% year-over-year in the first quarter, to $69.1 million. The software maker says that Taegis’ adjusted gross margin increased as well to reach 74.3%.

“The continued expansion of our Taegis gross margin reflects our ongoing focus on operational efficiencies driven by our investments in AI and unique cloud architecture,” said Secureworks Chief Financial Officer Alpana Wegner. “Delivering on our first-quarter financial commitments furthers our confidence in achieving our fiscal 2025 outlook.”

The Taegis product suite has three main components. The first, Taegis XDR, can scan a company’s cloud environments, employee devices and other technology assets for malicious activity. Secureworks offers the tool alongside Taegis VDR, which detects infrastructure vulnerabilities that might be used by hackers in future cyberattacks.

The third core component of the product suite made its debut last month. Taegis NDR, as the tool is called, can scan a company’s network traffic for malicious requests. Secureworks says that the software is capable of blocking breach attempts immediately after they’re detected without the need for human input.

In an investor presentation released today, the company detailed that Taegis is used by about 2,000 organizations. Secureworks says that it helps those customers analyze about five trillion cybersecurity-related data points from their infrastructure every week. To date, the software maker has collected more than 50 petabytes of threat data that it uses to enhance its breach detection algorithms.

The 10% revenue increase that Taegis delivered during the first quarter helped Secureworks turn a surprise profit. The company generated adjusted net income of $4.2 million, or five cents per share, after losing $17.1 million the same time a year earlier. Analysts had expected an adjusted loss of one cent per share. 

Secureworks upgraded its full-year earnings forecast. In March, the company projected adjusted net income of up to $7 million. Secureworks is now expecting adjusted net income of between $3 million and $8 million on $325 million to $335 million in revenue. 

Image: Secureworks