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Secureworks CEO Pitches SOC of the Future

Secureworks is showing progress in the managed security services provider (MSSP) market, and the company is undergoing a “strategic transition” that involves a so-called “SOC of the future” initiative.

The effort includes Red Cloak TDR (threat detection and response), managed detection and response coupled with security operations expertise. Moreover, TDR is a SaaS-based application that will make Secureworks more nimble, CEO Michael Cote asserted during the company’s earnings call on Thursday.

More than 65 customers upgraded to the new services in less than four weeks, and the early feedback about the new offerings has been very positive, Cote added.

Secureworks Performance vs Overall MSSP Market

No doubt, the managed security services market is red-hot. And Secureworks will rank among the world’s Top 100 MSSPs for 2019 when we unveil our latest annual research results on September 19. But the company isn’t growing as fast as the overall MSSP market.

For its Q2 of fiscal 2020, Secureworks delivered:

  • Revenue was $136.6 million, up 6.1 percent from the second quarter of fiscal 2019, including an increase of 26.7 percent, internationally.
  • A GAAP net loss was $10.3 million, compared with $9.8 million in the second quarter of fiscal 2019.

In stark contrast, the overall MSSP industry is growing between 13 percent and 15 percent annually, according to our estimates and third-party data points.

Secureworks CEO Explains SOC of the Future

Still, Cote sounded pleased with Secureworks’ business progress and software innovation efforts during the earnings call, and in prepared statements.

Explaining the company’s business strategy, Cote said:

“The future of security operations requires a more agile, scalable, and effective model to address the challenges of today’s dynamic IT landscape and rapidly evolving threats. The ‘SOC of the future’ demands a leap forward in capabilities made possible through software-driven solutions that leverage the speed and scale of machine learning, crowd-sourced threat intelligence and incident response insights to provide visibility across a customer’s environment, real-time collaboration with experts and smarter automation.”

More Secureworks Business Metrics

Additional business and financial metrics surfaced during the earnings call. Among the factoids from Secureworks to note:

  • The company closed nine deals with a total contract value greater than $1 million in the second quarter.
  • Revenue outside the U.S. represented 26% of total revenue in the second quarter up from 22% of total revenue in Q2 last year.
  • The company’s revenue retention rate was 99 percent — though customer churn rates were not disclosed. (Churn was an issue in an earlier quarter.)
  • The company did not mention its channel partner program during the call, but did point to strategic alliances with Carbon Black, CrowdStrike and VMware.

The earnings results and longer-term forecast generally exceeded Wall Street’s expectations.

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