SecureWorks Corp. (NASDAQ:SCWX) Q1 2024 Earnings Call Transcript

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Hamza Fodderwala: Thank you.

Operator: [Operator Instructions] Our next question comes from Tal Liani from Bank of America. Tal, your line is now open. Please go ahead.

Madeline Brooks: Hi, team. This is Madeline Brooks on for Tal this morning. Just a few quick ones for me. I guess I want to dive into macro in the opening remarks. I understand that obviously, we have some of the revenue being weighed down by MSS. But I also wanted to just touch on what you’re seeing from an economic cycle. And then as we look into the back half of the year, assuming stronger revenue growth for the back half and candidly, across the board, I think our cyber companies over the course of this quarter have try to put in place just more conservative guidance for back half. So what are you guys seeing differently in the market that gives you the confidence that the back half will be stronger for you? Thanks.

Wendy Thomas: Thanks for that. So let me — I’ll just add a little color on the macro environment. For us, as I mentioned, the last three quarters, the third quarter, fourth quarter last year, first quarter of this year, definitely looked a lot different in terms of profile from either the first half of last year, even the year prior, but we didn’t see a material shift in customer behavior or potential customer behavior in terms of their scrutiny of deals, which is definitely more elevated and their own attention to their budget, their business. I think it’s kind of a continuation of the same. For us, while we, of course, see continued growth in Taegis, our second half inflection in total revenue is more a function of the roll-off and transition of the other MSS business as opposed to us saying there’s materially different trajectory in our core business.

And you can see that in the Taegis ARR guide. So hopefully, we’re in a little bit of a different situation. So hopefully, that color helps.

Madeline Brooks: Thank you. Just one follow-up to your [technical difficulty] strategic customers year-over-year. Can you talk a little bit about where we are in terms of the transition of your existing customer base and maybe out of that 600 [indiscernible] customers were net new?

Wendy Thomas: Sorry, you broke up just a little bit. I’m going to stay back your question, which I think you asked. And if it doesn’t hit your questions, and we can hit it on follow-up. I think the first question was around of the 600 customers we added year-over-year. How much — what percentage were net new versus resolution? And the — I’d say we’re the exact numbers for you? We’re about 60-40. I think that’s been about consistent in terms of — obviously, first quarter was a new — a new customer story as opposed and cross sales, of course, as opposed to resolutioning. And the second question, I don’t know if you all heard. Can you maybe try again on the second question?

Madeline Brooks: Actually, you answered it. So, thank you.

Wendy Thomas: Okay. Great.

Madeline Brooks: All right.

Wendy Thomas: You’re welcome.

Operator: We currently have no further questions. So I would like to turn the call back to Mr. Toomey for final remarks. Please go ahead.

Kevin Toomey: Thank you. That ends the Q&A on today’s call. A replay of this webcast will be available on our Investor Relations page at secureworks.com, along with our Q1 supplemental deck with additional financial tables. Thank you all for joining us today.

Operator: Ladies and gentlemen, this concludes today’s call. Thank you for joining. You may now disconnect your lines. Thank you.

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