scwx-20220429

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)
☑						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 29, 2022


or
☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number: 001-37748

SecureWorks Corp.

(Exact name of registrant as specified in its charter)

Delaware

27-0463349

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer Identification No.)

One Concourse Parkway NE

Suite 500

Atlanta,

Georgia

30328

(Address of principal executive offices)

(Zip Code)

(Registrant’s telephone number, including area code): (404) 327-6339

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock,	SCWX	The Nasdaq Stock Market LLC
par value $0.01 per share		(Nasdaq Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☑

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of June 1, 2022, there were 84,859,549 shares of the registrant's common stock outstanding, consisting of 14,859,549 outstanding shares of Class A common stock and 70,000,000 outstanding shares of Class B common stock.

TABLE OF CONTENTS

ITEM

PAGE

Part I.

FINANCIAL INFORMATION

Item 1.

Financial Statements (unaudited)

Condensed Consolidated Statements of Financial Position as of April 29, 2022 and January 28, 2022 (unaudited)

Condensed Consolidated Statements of Operations for the three months ended A pril 29, 2022 and April 30, 2021 (unaudited)

Condensed Consolidated Statements of Comprehensive Loss for the three months ended April 29, 2022 and April 30, 2021 (unaudited)

Condensed Consolidated Statements of Cash Flows for the three months ended April 29, 2022 and April 30, 2021 (unaudited)

Condensed Consolidated Statement of Stockholders' Equity for the three months ended April 29, 2022 and April 30, 2021 (unaudited)

Notes to Condensed Consolidated Financial Statement s (unaudited)

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

Unregistered Sales of Equity and Use of Proceeds

Item 6.

Exhibits

Signature

Except where the content otherwise requires or where otherwise indicated, all references in this report to "Secureworks," "we," "us," "our" and "our Company" to refer to SecureWorks Corp. and our subsidiaries on a consolidated basis.

Part I. Financial Information

Item 1. Financial Statements

SECUREWORKS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited)

(in thousands, except for per share data)


	April 29, 2022		January 28, 2022

ASSETS
Current assets:
Cash and cash equivalents	$	186,220	$	220,655
Accounts receivable, net of allowances of $3,428 and $3,510, respectively	74,899		86,231
Inventories, net	373		505
Other current assets	27,075		26,040
Total current assets	288,567		333,431
Property and equipment, net	7,241		8,426
Operating lease right-of-use assets, net	16,208		17,441
Goodwill	425,877		425,926
Intangible assets, net	127,643		133,732
Other non-current assets	69,350		68,346
Total assets	$	934,886	$	987,302

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	22,859	$	15,062
Accrued and other current liabilities	55,064		88,122
Short-term deferred revenue	163,055		163,304

Total current liabilities	240,978		266,488
Long-term deferred revenue	10,412		12,764
Operating lease liabilities, non-current	15,547		16,869
Other non-current liabilities	42,646		43,124
Total liabilities	309,583		339,245
Commitments and contingencies (Note 7)
Stockholders' equity:
Preferred stock - $0.01 par value: 200,000 shares authorized; — shares issued	—		—
Common stock - Class A of $0.01 par value: 2,500,000 shares authorized; 14,859 and 14,282 shares issued and outstanding, at April 29, 2022 and January 28, 2022, respectively.	149		143
Common stock - Class B of $0.01 par value: 500,000 shares authorized; 70,000 shares issued and outstanding	700		700
Additional paid in capital	941,082		939,404
Accumulated deficit	(291,220)		(269,622)
Accumulated other comprehensive loss	(5,512)		(2,672)
Treasury stock, at cost - 1,257 and 1,257 shares, respectively	(19,896)		(19,896)
Total stockholders' equity	625,303		648,057
Total liabilities and stockholders' equity	$	934,886	$	987,302

The accompanying notes are an integral part of these condensed consolidated financial statements.

SECUREWORKS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(in thousands, except per share data)


	Three Months Ended
	April 29, 2022		April 30, 2021

Net revenue:
Subscription	$	94,413	$	104,070
Professional services	26,602		35,393
Total net revenue	121,015		139,463
Cost of revenue:
Subscription	32,826		37,425
Professional services	16,609		19,782
Total cost of revenue	49,435		57,207
Gross profit	71,580		82,256
Operating expenses:
Research and development	33,331		28,152
Sales and marketing	39,245		36,405
General and administrative	25,360		25,555
Total operating expenses	97,936		90,112
Operating loss	(26,356)		(7,856)
Interest and other, net	(697)		(907)
Loss before income taxes	(27,053)		(8,763)
Income tax benefit	(5,455)		(2,373)
Net loss	$	(21,598)	$	(6,390)

Loss per common share (basic and diluted)	$	(0.26)	$	(0.08)
Weighted-average common shares outstanding (basic and diluted)	83,763		81,985

The accompanying notes are an integral part of these condensed consolidated financial statements.

SECUREWORKS CORP.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited)

(in thousands)

Three Months Ended

April 29, 2022

April 30, 2021

Net loss

SEC Form 10-Q filed by SecureWorks Corp.