SecureWorks Stock

SecureWorks Corp. operates as a leading global cybersecurity provider of technology-driven solutions singularly focused on protecting customers by outpacing and outmaneuvering the adversary.

Through its open platform approach, the company creates integrated and comprehensive solutions by proactively managing the collection of point products deployed by its customers to address specific security issues and provides solutions to fortify gaps in their defenses. By aggregating and analyzing data from sources around the world, the company offers solutions that enable organizations to prevent security breaches, detect malicious activity, respond rapidly when a security breach occurs, and identify emerging threats.

The company offers its customers software-as-a-service, or SaaS, solutions, managed solutions, and professional services, including incident response and adversarial services.

The company’s solutions leverage the proprietary technologies, software security operations workflows, extensive expertise and knowledge of the tactics, techniques and procedures of the adversary that it has developed over more than two decades.

Growth Strategy

The company’s strategy is to be the essential cybersecurity company for a digitally connected world. To pursue its strategy, the company seeks to broaden its portfolio of software-as-a-service solutions; extend its technology leadership; embrace its partner ecosystem; expand and diversify its customer base; and deepen its existing customer relationships. As key elements of its strategy, the company seeks to be the cloud-native security software platform of choice; broaden its reach with security service providers to deliver its security software platform globally; and empower the global security community to beat the adversary at scale.

Subscription and Professional Services Offerings

The company offers an integrated suite of technology-driven security solutions enabled by its Taegis software platform and team of highly skilled security experts. The company’s technology-driven security solutions offer an innovative approach to prevent, detect and respond to cybersecurity breaches. The company’s Taegis software platform collects, aggregates, correlates and analyzes billions of events daily from its extensive customer base utilizing sophisticated algorithms to detect malicious activity and deliver security countermeasures, dynamic intelligence and valuable context regarding the intentions and actions of cyber adversaries. Through the company’s Taegis solutions, it provides global visibility and insight into malicious activity, enabling its customers to detect, respond to and effectively remediate threats quickly.

The company leverages threat intelligence and its extensive expertise and knowledge of the tactics, techniques and procedures of the adversary, which it has developed over two decades of processing and handling events, to provide insight into how attacks are initiated and spread across its customers’ networks. The Taegis software platform applies security intelligence based on threat indicators continuously gathered by the company’s Counter Threat Unit research team through in-depth analysis of the cyber threat environment. This team conducts research into emerging adversaries and new attack tactics and develops countermeasures to enable customers to prevent and detect potential compromises. The company’s ability to see more security incidents along with the applied intelligence acts as an early warning system that enables it to proactively alert customers, apply protections and respond quickly with appropriate context. The company’s software platform is designed to be open, enabling its customers to aggregate events from a wide range of endpoint, network, cloud and business systems.

Through delivering integrated solutions by security experts for security experts, the company allows organizations to measurably reduce their business risk from cyber exposure; optimize their investment in security controls; and address the shortage of personnel with cybersecurity expertise.

Customers may subscribe to the company’s full suite of solutions or elect to subscribe to various combinations of individual solutions. The company offers solutions, including the offerings discussed below, primarily on a subscription basis with terms typically ranging from one to three years.

The transformation of the company’s subscription business to its Taegis solutions began in fiscal 2021. As part of that transformation, the company informed customers early in the fourth quarter of fiscal 2022 that many of its other managed security services would no longer be available for purchase and renewals would not extend beyond the end of fiscal 2023.

Taegis Subscription Solutions

The company’s proprietary Taegis security platform was purpose-built as a cloud-native software platform that combines the power of machine-learning with security analytics and threat intelligence to unify detection and response across endpoint, network, cloud, email, identity and other systems for better security outcomes and simpler security operations. The Taegis software platform is a core element for the company’s SaaS solutions, which leverage workflows designed from its extensive security operations expertise and integrated orchestration and automation capabilities to increase the speed of response actions.

Taegis XDR, ManagedXDR and VDR are the first in a suite of software-driven applications and solutions driven by the company’s Taegis software platform that it plans to release.

Extended Detection and Response: Taegis XDR collects and processes vast amounts of data from a wide range of sources through hundreds of out-of-the-box integrations. The resulting advanced security analytics that are enriched by the company’s extensive understanding of the evolving threat environment and by the network effect of the company’s diverse customer base.

Taegis XDR analyzes activity from endpoint, network, cloud, email, identity and other systems while reducing the number of false-positive results security professionals face. It detects advanced threats by correlating information from a variety of sources and threat intelligence feeds, integrating Secureworks’ knowledge of adversary behaviors, and applying machine-learning to provide much-needed context about the threat. Taegis XDR builds trust in prioritized security alerts and frees security teams to focus on the most critical threats.

Taegis XDR unifies security environments and analyzes all relevant signals in one place. Customers gain additional context so they can quickly and accurately judge the implications of each event.

By enabling collaborative investigations with seamless hand-offs, Taegis enables customers to quickly reach conclusions with confidence. Customers can use a built-in chat feature from the user interface during an investigation to get real-time expert help from Secureworks in in less than 90 seconds.

The application allows for a quick, accurate, software-driven response that gives users the ability to automate the right action.

Taegis XDR is a cloud-based SaaS application that is continuously updated with new features and updates pushed to the production environment.

Taegis XDR includes advanced endpoint threat detection and network solutions with enhanced features, such as next-generation anti-virus prevention capabilities, or NGAV. These features enable customers to consolidate spending with a single vendor based on the platform as the centralized solution.

The application is designed to efficiently integrate into an organization’s control framework.

Managed Detection and Response: Taegis ManagedXDR, a fully managed cybersecurity solution, combines the capabilities of the Taegis XDR platform with extensive security expertise for 24/7 protection.

Taegis ManagedXDR leverages the knowledge gained from the company’s long history of security analysis, threat research and incident response engagements to continuously update its threat intelligence and analytics used to recognize malicious activity. The Taegis platform uses advanced analytics and machine learning to discover stealthy threats and automatically prioritize the most serious threats, allowing customers to focus on the events that matter.

Taegis ManagedXDR provides customers with access to the same intuitive interface and platform as the company’s Secureworks analysts to collaborate in the ways customers prefer. Customers can reach the company’s analysts directly 24/7 via live chat functionality in Taegis XDR.

Taegis ManagedXDR includes threat hunting to proactively isolate and contain threats that evade existing controls.

Taegis ManagedXDR incorporates incident response support that can be deployed quickly during a critical investigation.

Customers are able to extend the benefits of Taegis ManagedXDR with high-value add-ons:

Taegis ManagedXDR Elite solution provides a designated threat-hunting expert to perform continuous, proactive and iterative threat hunting across endpoint, network and cloud environments with bi-weekly updates on an organization’s exposure to targeted threats.

Taegis ManagedXDR Enhanced solution delivers higher-touch threat analysis and orchestrated response in which enhanced security analysts swivel between the Taegis XDR platform and multiple customer systems to provide a deeper level of analysis, yielding clear business context that consolidates everything occurring in a customer’s environment into one holistic picture, enabling intelligent and rapid escalation and orchestrated remediation.

Vulnerability Detection and Response: Taegis VDR simplifies vulnerability management with a risk-based approach that prioritizes the most critical threats and optimizes remediation efforts to protect what's most important. Powered by automated intelligent machine learning, VDR is a fully integrated, comprehensive solution that requires no configuration and automatically discovers endpoints, network equipment and devices, web applications and forgotten assets to scan for vulnerabilities and prioritize them. It's a self learning system that improves autonomously with use, further reducing risk and creating more efficiency and time for security team to focus on what matters most for organization.

Taegis VDR helps organizations reduce risk by simplifying security operations with a single solution to identify and respond to vulnerabilities instead of relying on multiple technologies.

Taegis VDR identifies vulnerabilities that require remediation by deploying a machine-learning risk prioritization engine. The solution provides context to determine which vulnerabilities pose the biggest risk to each customer. The machine-learning engine will continuously learn and improve its performance as it collects data over time, leading to a more effective and efficient vulnerability management program.

Taegis VDR features an automated approach to vulnerability management that helps an organization’s staff focus on other tasks while VDR continues to scan for vulnerabilities.

Other Managed Security Services

The company’s proprietary Secureworks Counter Threat Platform was built to be the foundation of its other managed security services, which were end-of-life at the end of fiscal 2023 and is only provided to customers in Japan or customers who have contracts that extend beyond fiscal 2023.

Security Monitoring: The company’s security monitoring service collected, correlated and analyzed logs, alerts and other messages generated by most leading security technologies and critical information assets to identify anomalies and respond to threats in near real time.

Advanced Endpoint Threat Detection: Advanced endpoint threat detection, or AETD, was a managed security service that monitored the state of endpoints (which included Windows servers, laptops and desktops) for threat indicators and investigated events to determine their severity, accuracy and context, while allowing for quick escalation of critical events to the customer’s attention.

Firewall and Next-Generation Firewall Services: The company’s firewall management services provided policy-based control over applications, users and content, device provisioning and deployment, while enabling customers to respond immediately to security events.

Managed Network Intrusion Detection System, or IDS, and Intrusion Prevention System, or IPS, Services: The company’s IDS or IPS services included security monitoring, performance and availability management, device upgrades and patch management, policy and signature management, integration of threat intelligence and use of its proprietary iSensor device.

Log Retention Services: The company’s log retention services provided support for a wide range of sources, allowing the capture and aggregation of millions of logs generated daily by critical information assets, such as servers, routers, firewalls, databases, applications and other systems of the log retention appliance.

The company provided two delivery options for these other managed security services.

Managed Delivery: With managed delivery, the company assumed control of a customer’s security technology so the customer could focus on running its business.

Monitored Delivery: Customers selecting monitored services obtained access to the company’s on-demand Counter Threat Platform through its web-based portal, plus monitoring and analysis by its security analysts of events collected from security and network devices and applications.

Professional Services

In addition to its Taegis solutions, the company offers a variety of professional services that advise customers on a broad range of security and risk-related matters, which include incident response, adversarial testing and Taegis professional services to accelerate adoption of its software solutions.

Incident Response

In its incident response engagements, the company helps customers rapidly analyze, contain and remediate security incidents to minimize their duration and impact. In addition, its incident response services can increase customer awareness of and interest in its Taegis subscription solutions as the company helps customers develop a stronger and more comprehensive security program and posture.

Incident Readiness: Secureworks provides incident readiness services to help customers understand current state and identify areas of weakness or existing compromise and expert guidance to enable pragmatic and risk-based improvements. The company’s incident management risk assessment reduces the risk of compromise by evaluating a customer’s ability to detect, resist, and respond to a variety of cyber attacks, including advanced persistent threats. The company’s deep experience in incident response investigations and security best practices forms the basis of its comprehensive incident response plan review, which is designed to assist its customers in guarding against gaps and uncertainty in the midst of a crisis and incorporates the latest threat intelligence tailored to the customer’s specific needs.

Emergency Incident Response Solutions: The company seeks to ensure that organizations experience minimal economic loss and operational disruption when facing a cyber security incident. The company’s team of experienced security professionals work hand-in-hand with customers to minimize the duration and impact of security incidents through incident management, technical expertise, investigative know-how, malware analysis and reverse engineering. Layered into the company’s incident response investigations and integrated into its Taegis platform is the threat intelligence developed by its Counter Threat Unit research team, which enriches its overall knowledge of the adversary and allows investigators to take a targeted approach and get to a faster resolution for its customers.

Taegis and Adversarial Professional Services

The company facilitates improving its customers' security posture by assessing their security capabilities, preparing employees against cyber-attacks, improving compliance and identifying, prioritizing and resolving the vulnerabilities that pose the greatest threat.

The company’s team has extensive experience conducting security engagements across many industries and geographic areas, and under recent regulations and industry standards that impose security mandates. Professional services the company offers include the following:

Taegis Professional Services: The company’s Taegis Professional Services assist customers by providing training, onboarding and integration services to assist with the implementation and adoption of its Taegis XDR platform. The services include assessing the customer’s environment, performing data integration activities and application training.

Adversarial Testing: The company’s adversarial testing solutions provide customers with a thorough analysis of their security posture to include logical, physical, technical and non-technical threats. These adversarial testing services identify risk-generating gaps in people, process and technology, and help organizations construct a stronger security posture and meet compliance mandates. The company’s testing solutions touch upon nearly every aspect of offensive security to include application security; network security; adversary exercises; vulnerability assessments delivered using Taegis VDR; and other customized and specialized testing services.

All of the company’s offensive services simulate cyber attacks using real-world tactics, techniques, and procedures through a blend of automated and manual attacks. The company’s offensive professionals also assist the Incident Response team during their investigations and provide adversarial insight that continually helps improve the detection efficacy of the Taegis platform.

Threat Hunting Assessment: The Secureworks Threat Hunting Assessment is a point-in-time 30-day comprehensive and intensive evaluation of the customer’s environment to identify previously unknown compromise activity, security misconfigurations, visibility gaps, control issues, and cyber threats and risks. The company’s team of security experts possess decades of combined experience countering adversary tradecraft. This human intelligence along with its proprietary hunting technology and Secureworks’ advanced security analytics enables the company to identify the presence of historical and active compromises entrenched within the environment. This solution helps the customer increase its cyber resilience with focused, tailored recommendations on security architecture, instrumentation, and controls.

Security Residency Solutions: The company’s security residency solutions provide customers with security consultants who serve as extended members of their staff either on-site or remotely to extend and heighten an organization’s security expertise and capabilities. Residency solutions are combined with other Secureworks solutions in complex enterprise environments to enhance the value customers experience. The company aligns with each customer’s internal processes, integrate its data feeds into customer applications and dashboards, and produces customized analytics and reporting. In addition, the company assists customers with handling the security events identified by its solutions.

Customers

As of February 3, 2023, the company had approximately 4,500 customers, including approximately 2,000 Taegis and 700 managed security subscription customers, across 77 countries. The company serves customers in a broad range of industries, including the financial services, manufacturing, technology, retail, insurance, utility and healthcare sectors. In fiscal 2023, financial services and manufacturing customers accounted for 20% and 26%, respectively, of the company’s revenue.

The fees the company charges for its solutions vary based on a number of factors, including the solutions selected, the number of customer devices covered by the selected solutions, and the level of management it provides for the solutions. Approximately 78% of the company’s revenue is derived from subscription-based arrangements, attributable to Taegis solutions and managed security services, while approximately 22% is derived from professional services engagements. As it responds to the evolving needs of its customers, the relative mix of subscription-based solutions and professional services it provides its customers may fluctuate.

Customer Success and Support

Customer success, training and support are key elements of the company’s commitment to provide a superior customer experience and differentiated value. The company has a comprehensive customer success training and support program to continuously improve the customer experience and to enhance the value that its customers derive from its solutions. The company provides education, training and support on the functionality of its solutions so that its customers fully utilize their benefits and it regularly conducts customer surveys to improve and enhance both its customer relationships and solutions portfolio. The company’s Taegis XDR and Taegis VDR customers receive 24/7 application support, as well as an integrated chat function. The company’s Taegis platform has an integrated customer experience software that analyzes how customers use its applications, highlights new features available, and solicits customer feedback.

Sales and Marketing

Sales and Marketing, together with Secureworks partners, drives growth by focusing on defining the Secureworks brand, increasing awareness, building a robust opportunity and revenue pipeline, and cultivating partner and customer relationships. The company creates customer value with its managed detection and response cybersecurity solutions that are cloud native and are offered primarily on a subscription basis. The company typically offers contract terms from one to three years and, as of February 3, 2023, are averaging two years in duration. The company provides additional customer value through expert incident response and adversarial security testing services.

Partner Program

Secureworks Taegis is a cloud-native XDR platform that rests at the core of the Secureworks MDR solution. The Taegis architecture enables the company to quickly integrate solutions and innovations from its partners, offering the best-fit cybersecurity solutions to its joint Secureworks + partner customers.

The company’s Partner First strategy, which has been fully implemented in North America, equips and enables its partners to leverage Taegis, together with Secureworks expert services, as an engine for growth. The company’s partners in turn enable Secureworks to be more flexible and fast to market, driving superior customer retention with their supplemental solution offerings and knowledge of customer needs. The company’s growing partner ecosystem includes cyber risk partners, solution providers, technology alliance partners, and managed security service providers (MSSPs).

Sales Teams

The company’s Sales teams are committed to driving sales opportunities through its partner community, and to closing all deals together. The company’s Customer Success and Account Management teams extend the value of its solutions by identifying cross-selling and upselling opportunities within its customer base and enhancing customer satisfaction. The company’s routes to market vary by country and the size of the customer organization.

The company’s Sales teams are a mix of inside sales and field sales professionals who are aligned with geographic regions. They are supported by technical Sales Engineers with deep security experience, who assess customer environments and needs, and by the company’s partner community, which matches the best solutions to customer needs.

In fiscal 2023, approximately 82% of Secureworks revenue, and 77% of the company’s Taegis revenue, was generated through Secureworks-sourced sales opportunities; in some cases this was done in collaboration with members of Dell’s sales force, with the remaining portion generated through partners. The company markets its solutions through Dell’s channel partners, as well as its own, and continuously work to optimize its commercial arrangements with Dell.

Marketing Team

The company’s Marketing team builds its Secureworks and Taegis brands, and increases awareness for its platform and solutions, as well as generating market demand and driving pipeline growth and helping grow and maintain its competitive advantage. The company develops and continuously refine company and solution messages, based on customer and buyer dialogs, and it launches new and enhanced offerings to market.

The company deploys demand generation campaigns, including digital marketing programs, to engage, educate, and inspire prospects to action by creating marketing content that is relevant to buyer needs at every stage of the buying cycle. The company’s awareness programs are yielding consistent editorial coverage in widely distributed business publications and industry trade publications. The company’s social media programs regularly engage individual buyers and influencers with marketing and executive content, and it participates in digital marketing programs and face-to-face events to create customer and prospect awareness and action.

Competition

The company competes primarily against the following three types of security product and services providers, some of which operate principally in the large enterprise market and others in the market for small and medium-sized businesses: security providers and niche IT security products and services, such as CrowdStrike, Inc., Rapid7, Inc., SentinelOne, Inc. and Arctic Wolf; diversified technology and telecommunications companies, such as Palo Alto Networks, Inc., Microsoft, International Business Machines Corporation and AT&T Inc.; and small regional managed security service providers, including new market entrants that compete in the small and medium-sized businesses market.

Patents and Patent Applications

As of February 3, 2023, the company owned 56 issued patents and 10 pending patent applications in the United States and four issued patents and eight pending patent applications outside the United States. The issued patents are expected to expire between 2023 and 2040.

Trademarks and Copyrights

The U.S. Patent and Trademark Office has granted the company federal registrations for some of its trademarks. Federal registration of trademarks is effective for as long as it continues to use the trademarks and maintain its registrations as permitted under federal law. The company also has obtained protection for some of its trademarks, and has pending applications for trademark protection, in the European Community and various countries.

The company has entered into a trademark license agreement with Dell Inc. under which Dell Inc. has granted it a non-exclusive, royalty-free worldwide license to use the trademark DELL, solely in the form of SECUREWORKS-A DELL COMPANY, in connection with its business and products, services and advertising and marketing materials related to its business.

Seasonality

Given the annual budget approval process of many of its customers, the company has begun to see seasonal patterns in its business. The company also experiences seasonality in its gross and operating margins, with lower margins in the first half of its fiscal year (year ended February 3, 2023) as a result of greater expenditures for payroll taxes and annual sales and marketing events.

History

The company was founded in 1999. It was incorporated in Georgia in 2009 and reincorporated in Delaware in 2015. The company was formerly known as SecureWorks Holding Corporation and changed its name to SecureWorks Corp. in 2015.