SecureWorks Corp. (SCWX) | Investment Case

1. Company Snapshot

1.a. Company Description

SecureWorks Corp., through its subsidiaries, provides technology-driven information security solutions for protecting its customers in the United States and internationally.The company's solutions include software-as-a-service solutions, managed security services, and professional services, including incident response and security risk consulting services.Its solutions enable organizations to prevent security breaches, detect malicious activity, respond rapidly to security breaches, and identify emerging threats.

The company sells its solutions primarily through its direct sales organization, as well as through referral agents, regional value-added resellers, and trade associations.It serves customers in a range of industries, including financial services, manufacturing, technology, retail, insurance, utility, and healthcare sectors.The company was formerly known as SecureWorks Holding Corporation and changed its name to SecureWorks Corp.

in November 2015.SecureWorks Corp.was founded in 1999 and is headquartered in Atlanta, Georgia.

SecureWorks Corp.operates as a subsidiary of Dell Marketing L.P.

Show Full description

1.b. Last Insights on SCWX

SecureWorks Corp.'s recent performance was driven by the announcement of its third quarter fiscal 2025 results, which showed a 6% year-over-year growth in Taegis revenue to $71.4 million. Additionally, the company's pending acquisition by Sophos, valued at approximately $859 million, is expected to strengthen the security community by bringing together two industry leaders with shared mission-driven cultures. The all-cash transaction will provide SecureWorks shareholders with $8.50 per share, a positive development for investors.

1.c. Company Highlights

Last Price	8.51
Change Percentage	0.00%
Open	8.51
Previous Close	8.51
Market Cap ( Millions)	756
Volume	2158196
Year High	9.76
Year Low	5.61
M A 50	8.46
M A 200	7.65

FCF Yield	-0.91%
Dividend Yield	0.00%
ROE	-17.12%
Debt / Equity	1.09%
Net Debt / EBIDTA	142.83%
Price To Book	1.7
Price Earnings Ratio	-9.66
Price To FCF	-109.57
Price To sales	3.02
EV / EBITDA	-20.96

2. Transcript Summary

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3. NewsRoom

Sophos lays off 6% of workforce following Secureworks acquisition

Feb -13

Source: techcrunch.com

Sophos Completes Secureworks Acquisition

Feb -03

Source: globenewswire.com

SecureWorks (SCWX) Reports Break-Even Earnings for Q3

Dec -04

Source: zacks.com

Secureworks Announces Third Quarter Fiscal 2025 Results

Dec -04

Source: prnewswire.com

Secureworks to Report Third Quarter Fiscal 2025 Financial Results on December 4, 2024

Nov -20

Source: prnewswire.com

STOCKHOLDER ALERT: The M&A Class Action Firm Investigates the Merger of SecureWorks Corp. – SCWX

Oct -23

Source: globenewswire.com

New Strong Sell Stocks for October 23rd

Oct -23

Source: zacks.com

Shareholder Alert: Ademi LLP Investigates Whether SecureWorks Corp. Is Obtaining a Fair Price for Its Public Shareholders

Oct -21

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (13.40%)

6. Segments

Taegis Subscription Solutions

Expected Growth: 14.03%

Taegis Subscription Solutions' 14.03% growth is driven by increasing demand for cloud-based security solutions, expansion into new markets, and strategic partnerships. Additionally, the rise of remote work and digital transformation has accelerated the need for robust cybersecurity measures, further fueling growth.

Professional Services

Expected Growth: 11.6%

SecureWorks Corp.'s 11.6% growth in Professional Services is driven by increasing demand for cybersecurity solutions, expansion into new markets, and strategic partnerships. The company's expertise in threat detection and response, as well as its comprehensive security consulting services, are also contributing factors. Additionally, the growing need for compliance and risk management is fueling demand for SecureWorks' services.

Managed Security Services

Expected Growth: 11.95%

SecureWorks Corp.'s 11.95% growth in Managed Security Services is driven by increasing demand for cybersecurity solutions, rising threat of cyber-attacks, and growing need for compliance and regulatory requirements. Additionally, the shift to cloud-based services, IoT adoption, and the need for 24/7 monitoring and incident response are contributing to the growth.

7. Detailed Products

Managed Security Services

Comprehensive security monitoring and incident response services to detect and respond to threats in real-time

Incident Response

Rapid response and remediation services to contain and eradicate threats, minimizing downtime and data loss

Vulnerability Management

Comprehensive vulnerability scanning and penetration testing to identify and prioritize vulnerabilities for remediation

Security Consulting Services

Customized security consulting services to assess, design, and implement security solutions tailored to an organization's specific needs

Managed Detection and Response (MDR)

Advanced threat detection and response services, leveraging machine learning and human analysis to identify and respond to threats

Cloud Security Services

Comprehensive cloud security services, including cloud security assessments, architecture, and managed security services

8. SecureWorks Corp.'s Porter Forces

Forces Ranking

Threat Of Substitutes

SecureWorks Corp. has a low threat of substitutes due to its unique cybersecurity solutions and services, making it difficult for customers to find alternative options.

Bargaining Power Of Customers

SecureWorks Corp. has a medium bargaining power of customers, as customers have some flexibility to negotiate prices and services, but the company's strong brand and expertise in cybersecurity limit their bargaining power.

Bargaining Power Of Suppliers

SecureWorks Corp. has a low bargaining power of suppliers, as the company has a diverse supplier base and is not heavily dependent on a single supplier, giving it more negotiating power.

Threat Of New Entrants

SecureWorks Corp. has a high threat of new entrants, as the cybersecurity industry is rapidly growing and attracting new players, increasing competition and potential disruption to the company's market share.

Intensity Of Rivalry

SecureWorks Corp. operates in a highly competitive industry, with many established players and new entrants, leading to a high intensity of rivalry and competition for market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	2.51%
Debt Cost	8.89%
Equity Weight	97.49%
Equity Cost	8.89%
WACC	8.89%
Leverage	2.57%

11. Quality Control: SecureWorks Corp. passed 2 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Consensus Cloud Solutions

A-Score: 5.1/10

Value: 8.6

Growth: 2.4

Quality: 7.6

Yield: 0.0

Momentum: 8.0

Volatility: 3.7

1-Year Total Return ->

NetScout Systems

A-Score: 5.0/10

Value: 5.5

Growth: 1.7

Quality: 7.5

Yield: 0.0

Momentum: 8.0

Volatility: 7.0

1-Year Total Return ->

Priority Technology Holdings

A-Score: 4.7/10

Value: 7.4

Growth: 7.0

Quality: 4.8

Yield: 0.0

Momentum: 6.5

Volatility: 2.7

1-Year Total Return ->

SecureWorks

A-Score: 4.0/10

Value: 7.6

Growth: 1.1

Quality: 4.8

Yield: 0.0

Momentum: 6.0

Volatility: 4.7

1-Year Total Return ->

Rekor Systems

A-Score: 3.6/10

Value: 6.4

Growth: 3.3

Quality: 3.5

Yield: 0.0

Momentum: 8.0

Volatility: 0.3

1-Year Total Return ->

Rackspace Technology

A-Score: 2.8/10

Value: 9.2

Growth: 1.6

Quality: 3.7

Yield: 0.0

Momentum: 1.0

Volatility: 1.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

33.64%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

8.89%

SecureWorks Corp. - US81374A1051

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on SCWX

1.c. Company Highlights

Lower Growth

Cheaper

Weak Momentum

Earnings Beats

Revenues Beats

Stable Momentum

Medium Volatility

Earnings Miss

Average Quality

Fairly Valued

Strong Momentum

Less Volatile

Average Yield

2. Transcript Summary

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (13.40%)

6. Segments

Taegis Subscription Solutions

Expected Growth: 14.03%

Professional Services

Expected Growth: 11.6%

Managed Security Services

Expected Growth: 11.95%

7. Detailed Products

Managed Security Services

Incident Response

Vulnerability Management

Security Consulting Services

Managed Detection and Response (MDR)

Cloud Security Services

8. SecureWorks Corp.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: SecureWorks Corp. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

8.51$

Current Price

8.51$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA