SecureWorks CEO Michael CoteSecureworks, a Top 100 MSSP, continues to hit some business turbulence as the cybersecurity company strives to evolve toward software-driven managed security services. The latest challenge involves a shrinking average deal size, the company disclosed today.Although Secureworks is making some progress on multiple fronts, the business challenges show just how difficult it is to compete in today's fast-changing MSSP market, and also highlight the challenges parent Dell Technologies may face as it potentially seeks to sell Secureworks.For the Secureworks fiscal first quarter of 2020:
Revenue was $132.8 million, increased 5.3 percent from the first quarter of fiscal 2019;
GAAP net loss was $8.3 million, compared with $13.8 million in the first quarter of fiscal 2019.
Secureworks: Good News, Bad News
The Secureworks figures generally beat Wall Street's expectations, but the company revealed the deal-size financial hurdles as well. In a prepared statement, CEO Michael Cote said:
“Our first quarter financial results were positive. However, the value of new business in the quarter fell below our expectations. In the near-term, we are focused on business execution as we continue to transition our product portfolio and business model to software-driven solutions. I am confident that we have the right strategy and have identified the right actions to drive growth and long-term value,.
The result: SecureWorks expects fiscal 2020 revenue of $535 million to $545 million, down from an earlier forecast of $565 million to $575 million.The shrinking size of some customer contracts arrive after Secureworks revealed customer churn issues last quarter.
Secureworks: MSSP Business Evolution
Still, there are opportunities ahead. The overall MSSP market will grow about 14.5 percent annually through 2024, according to Market Research Engine.In a prepared statement, Cote reinforced some familiar themes from Secureworks, stating that the company's transition toward software-driven security services is showing progress -- including the launch of Red Cloak Threat Detection and Response (TDR), a security analytics application.The company's Red Cloak Partner Program has also built relationships with Carbon Black, CrowdStrike -- essentially marrying Secureworks' managed security services with third-party endpoint protection services.We'll update this coverage once we gather more information from Secureworks' earnings call.
Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.
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