SecureWorks (SCWX 16.89, +0.62, +3.81%), which was spun-off from Dell (DVMT) in April
2016, is one of the few tech stocks that has held up quite well in recent
months despite pressure on the sector. The company a develops cybersecurity
software that helps customers to fortify their cyber defenses to prevent
security breaches, to detect malicious activity, to prioritize and respond
rapidly to security breaches, and to predict emerging threats. The company also
provides security and risk consulting.
At the core of its offering is its Counter Threat Platform, a proprietary technology that collects, correlates, and analyzes billions of daily events and data points and generates security intelligence on threat actor groups and global threat indicators. It provides global visibility into threat landscapes, lending a powerful perspective on its clients' network environments.
As companies undergo greater degrees of digital transformation, which include a surge in the number of endpoints, the expansion of software-defined networks, and the emergence of IoT, the scope of elements vulnerable to attack has grown. SCWX says this is precisely where it enters the picture, as its platform is focused on expanding across its customers’ various ecosystems.
While SCWX's North American enterprise sales performance has been inconsistent, the company is doing a good job in terms of expanding internationally. International revenue growth in Q3 (Oct) rose 51% year/year to represent 23% of total revenue, up from 17% in the prior year, on consistently strong growth in the UK, the Middle East, and Japan.
Partnerships have also acted as a nice tailwind for SCWX, particularly across Dell Technologies. Specifically, SecureWorks is occupying an increasingly important role in enabling security transformation for Dell’s customers, in collaboration with Dell subsidiary VMware (VMW).
The company’s stock initially pulled back a bit on its recent Q3 (Oct) report as customer growth metrics were a bit disappointing. Also, revenue retention declined to 91% from 97% last year. In fairness, SCWX said that this was due to a large customer transitioning to higher margin services and away from legacy services. The stock has more or less recovered since then.
Overall, SecureWorks has done quite well, and its stock price has held up relative to other tech names. Its continuing close relationship with Dell and VMWare certainly has certainly helped business, as have tailwinds from its significant international expansion efforts.
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