(Mark One)
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
For the quarterly period ended August 3, 2018
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or
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the transition period from
to
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Delaware
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27-0463349
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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One Concourse Parkway NE
Suite 500
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Atlanta, Georgia
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30328
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
¨
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Accelerated filer
þ
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Non-accelerated filer
¨
(Do not check if a smaller reporting company)
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Smaller reporting company
¨
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Emerging growth company
þ
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August 3,
2018 |
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February 2, 2018*
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ASSETS
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|||||||
Current assets:
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Cash and cash equivalents
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$
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103,316
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$
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101,539
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Accounts receivable, net of allowances of $7,388 and $8,246, respectively
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133,344
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157,764
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Inventories, net
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623
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1,030
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Other current assets
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40,814
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40,551
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Total current assets
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278,097
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300,884
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Property and equipment, net
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32,611
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33,457
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Goodwill
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416,487
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416,487
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Purchased intangible assets, net
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220,316
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234,184
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Other non-current assets
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79,638
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72,069
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Total assets
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$
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1,027,149
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$
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1,057,081
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities:
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Accounts payable
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$
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21,417
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$
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23,266
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Accrued and other
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65,321
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81,625
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Short-term deferred revenue
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151,828
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137,697
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Total current liabilities
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238,566
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242,588
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Long-term deferred revenue
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13,435
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14,948
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Other non-current liabilities
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62,878
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68,455
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Total liabilities
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314,879
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325,991
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Commitments and contingencies (Note 6)
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Stockholders' equity:
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Preferred stock - $0.01 par value: 200,000 shares authorized; 0 shares issued
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—
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—
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Common stock - Class A of $.01 par value: 2,500,000 shares authorized; 11,797 and 11,085 issued and outstanding as of August 3, 2018 and February 2, 2018, respectively.
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118
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111
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Common stock - Class B of $.01 par value: 500,000 shares authorized; 70,000 shares issued and outstanding as of August 3, 2018 and February 2, 2018
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700
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700
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Additional paid in capital
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874,907
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867,411
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Accumulated deficit
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(160,750
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)
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(137,162
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)
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Accumulated other comprehensive (loss) income
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(2,705
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)
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30
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Total stockholders' equity
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712,270
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731,090
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Total liabilities and stockholders' equity
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$
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1,027,149
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$
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1,057,081
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Three Months Ended
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Six Months Ended
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||||||||||||
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August 3, 2018
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August 4, 2017*
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August 3, 2018
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August 4, 2017*
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Net revenue
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$
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128,778
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$
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116,240
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$
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254,939
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$
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229,918
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Cost of revenue
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62,548
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55,907
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123,078
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109,520
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Gross margin
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66,230
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60,333
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131,861
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120,398
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Research and development
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22,453
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19,693
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44,807
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39,172
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Sales and marketing
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35,521
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35,433
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71,191
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71,611
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General and administrative
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22,419
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21,138
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47,616
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44,542
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Total operating expenses
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80,393
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76,264
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163,614
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155,325
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Operating loss
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(14,163
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)
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(15,931
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)
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(31,753
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)
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(34,927
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)
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Interest and other, net
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1,003
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(420
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)
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1,508
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(1,069
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)
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Loss before income taxes
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(13,160
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)
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(16,351
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)
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(30,245
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)
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(35,996
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)
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Income tax benefit
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(3,391
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)
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(6,080
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)
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(6,657
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)
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(12,448
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)
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Net loss
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$
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(9,769
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)
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$
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(10,271
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)
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$
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(23,588
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)
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$
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(23,548
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)
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Net loss per common share (basic and diluted)
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$
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(0.12
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)
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$
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(0.13
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)
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$
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(0.29
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)
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$
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(0.29
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)
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Weighted-average common shares outstanding (basic and diluted)
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80,839
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80,353
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80,680
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80,205
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Three Months Ended
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Six Months Ended
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||||||||||||
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August 3, 2018
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August 4, 2017*
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August 3, 2018
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August 4, 2017*
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Net loss
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$
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(9,769
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)
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$
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(10,271
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)
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$
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(23,588
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)
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$
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(23,548
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)
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Foreign currency translation adjustments, net of tax
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(1,165
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)
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784
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(2,735
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)
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1,519
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Comprehensive loss
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$
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(10,934
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)
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$
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(9,487
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)
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$
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(26,323
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)
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$
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(22,029
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)
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Six Months Ended
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||||||
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August 3, 2018
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August 4, 2017*
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Cash flows from operating activities:
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Net loss
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$
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(23,588
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)
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$
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(23,548
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)
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Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
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Depreciation and amortization
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20,512
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20,666
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Stock-based compensation expense
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9,642
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7,158
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Effects of exchange rate changes on monetary assets and liabilities denominated in foreign currencies
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(1,275
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)
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1,449
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Income tax benefit
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(6,657
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)
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(12,448
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)
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Provision for doubtful accounts
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1,571
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2,591
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Changes in assets and liabilities:
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Accounts receivable
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22,542
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(12,491
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)
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Due to / from parent
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(1,334
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)
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7,653
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Inventories
|
407
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778
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Other assets
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(5,162
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)
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(4,014
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)
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Accounts payable
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(1,392
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)
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428
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Deferred revenue
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12,240
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13,617
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Accrued and other liabilities
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(16,620
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)
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(10,254
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)
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Net cash provided by (used in) operating activities
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10,886
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(8,415
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)
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Cash flows from investing activities:
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|
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|
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Capital expenditures
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(5,366
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)
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(8,376
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)
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Net cash provided by (used in) investing activities
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(5,366
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)
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(8,376
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)
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Cash flows from financing activities:
|
|
|
|
|
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Principal payments on financing arrangement with Dell Financial Services
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(1,104
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)
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(800
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)
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Taxes paid on vested restricted shares
|
(2,139
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)
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(1,224
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)
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Other financing activities
|
(500
|
)
|
|
—
|
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Net cash provided by (used in) financing activities
|
(3,743
|
)
|
|
(2,024
|
)
|
||
|
|
|
|
||||
Net increase (decrease) in cash and cash equivalents
|
1,777
|
|
|
(18,815
|
)
|
||
Cash and cash equivalents at beginning of the period
|
101,539
|
|
|
116,595
|
|
||
Cash and cash equivalents at end of the period
|
$
|
103,316
|
|
|
$
|
97,780
|
|
|
|
Common Stock - Class A
|
|
Common Stock - Class B
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
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Outstanding Shares
|
|
Amount
|
|
Outstanding Shares
|
|
Amount
|
|
Additional Paid in Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive (Loss) Income
|
|
Total Stockholders' Equity
|
||||||||||||||
Balances, February 2, 2018*
|
|
11,085
|
|
|
$
|
111
|
|
|
70,000
|
|
|
$
|
700
|
|
|
$
|
867,411
|
|
|
$
|
(137,162
|
)
|
|
$
|
30
|
|
|
$
|
731,090
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23,588
|
)
|
|
—
|
|
|
(23,588
|
)
|
||||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,735
|
)
|
|
(2,735
|
)
|
||||||
Vesting of restricted stock units
|
|
545
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Grant of restricted stock awards
|
|
386
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Common stock withheld as payment for withholding taxes upon the vesting of restricted shares
|
|
(219
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2,137
|
)
|
|
—
|
|
|
—
|
|
|
(2,139
|
)
|
||||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,642
|
|
|
—
|
|
|
—
|
|
|
9,642
|
|
||||||
Balances, August 3, 2018
|
|
11,797
|
|
|
$
|
118
|
|
|
70,000
|
|
|
$
|
700
|
|
|
$
|
874,907
|
|
|
$
|
(160,750
|
)
|
|
$
|
(2,705
|
)
|
|
$
|
712,270
|
|
•
|
Identification of the contract, or contracts, with a customer—
A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer, (ii) the contract has commercial substance and the parties are committed to perform and, (iii) payment terms can be identified and collection of substantially all consideration to which the Company will be entitled in exchange for goods or services that will be transferred is deemed probable based on the customer's intent and ability to pay. Contracts entered into for professional services and subscription-based solutions near or at the same time are generally not combined as a single contract for accounting purposes, since neither the pricing nor the services are interrelated.
|
•
|
Identification of the performance obligations in the contract—
Performance obligations promised in a contract are identified based on the goods or services that will be transferred to the customer that are both (i) capable of being distinct, whereby the customer can benefit from the goods or service either on its own or together with other resources that are readily available from third parties or from the Company, and (ii) distinct in the context of the contract, whereby the transfer of the goods or services is separately identifiable from other promises in the contract. When promised goods or services are incapable of being distinct, the Company accounts for them as a combined performance obligation. With regard to a typical contract for subscription-based solutions, the performance obligation represents a series of distinct services that will be accounted for as a single performance obligation. In a typical professional services contract, the Company has a separate performance obligation associated with each service. The Company is generally acting as a principal in each subscription-based and professional services arrangement and, thus, recognizes revenue on a gross basis.
|
•
|
Determination of the transaction price—
The total transaction price is primarily fixed in nature as the consideration is tied to the specific services purchased by the customer, which constitutes a series for delivery of the solutions over the duration of the contract. For professional services contracts, variable consideration exists in the form of rescheduling penalties and expense reimbursements; no estimation is required at contract inception, since variable consideration is allocated to the applicable period.
|
•
|
Allocation of the transaction price to the performance obligations in the contract—
The Company allocates the transaction price to each performance obligation based on the performance obligation's standalone selling price. Standalone selling price is determined by considering all information available to the Company, such as historical selling prices of the performance obligation, geographic location, overall strategic pricing objective, market conditions and internally approved pricing guidelines related to the performance obligations.
|
•
|
Recognition of revenue when, or as, the Company satisfies performance obligation—
The Company recognizes revenue over time using a time-elapsed output method to measure progress (i.e., ratable recognition) for the subscription-based performance obligation over the contract term. For any upgraded installation services, which the Company has determined represent a performance obligation separate from its subscription-based arrangements, revenue is recognized over time using hours elapsed over the service term as an appropriate method to measure progress. For the performance obligation pertaining to professional services arrangements, the Company recognizes revenue over time using an input method based on time (hours or days) incurred to measure progress over the contract term.
|
|
|
Three Months Ended August 3, 2018
|
|
Three Months Ended August 4, 2017
|
|
Six Months Ended August 3, 2018
|
|
Six Months Ended August 4, 2017
|
||||||||
Managed Security Services revenue
|
|
$
|
98,435
|
|
|
$
|
91,511
|
|
|
$
|
197,135
|
|
|
$
|
180,420
|
|
Security and Risk Consulting revenue
|
|
30,343
|
|
|
24,729
|
|
|
57,804
|
|
|
49,498
|
|
||||
Total revenue
|
|
$
|
128,778
|
|
|
$
|
116,240
|
|
|
$
|
254,939
|
|
|
$
|
229,918
|
|
|
|
February 2, 2018
|
|
Adjustments for Adoption of
|
|
February 2, 2018
|
||||||
|
|
(as reported)
|
|
ASC 606
|
|
(as adjusted)
|
||||||
Current assets:
|
|
|
|
|
|
|
||||||
Other current assets
|
|
$
|
42,163
|
|
|
$
|
(1,612
|
)
|
|
$
|
40,551
|
|
Total current assets
|
|
302,496
|
|
|
(1,612
|
)
|
|
300,884
|
|
|||
Other non-current assets
|
|
4,677
|
|
|
67,392
|
|
|
72,069
|
|
|||
Total assets
|
|
$
|
991,301
|
|
|
$
|
65,780
|
|
|
$
|
1,057,081
|
|
|
|
|
|
|
|
|
||||||
Current liabilities:
|
|
|
|
|
|
|
||||||
Deferred revenue
|
|
$
|
139,632
|
|
|
$
|
(1,935
|
)
|
|
$
|
137,697
|
|
Total current liabilities
|
|
244,523
|
|
|
(1,935
|
)
|
|
242,588
|
|
|||
Other non-current liabilities
|
|
52,681
|
|
|
15,774
|
|
|
68,455
|
|
|||
Total liabilities
|
|
312,152
|
|
|
13,839
|
|
|
325,991
|
|
|||
Stockholders' equity:
|
|
|
|
|
|
|
||||||
Accumulated deficit
|
|
(188,936
|
)
|
|
51,774
|
|
|
(137,162
|
)
|
|||
Accumulated other comprehensive (loss) income
|
|
(137
|
)
|
|
167
|
|
|
30
|
|
|||
Total stockholders' equity
|
|
$
|
679,149
|
|
|
$
|
51,941
|
|
|
$
|
731,090
|
|
|
|
Three Months Ended August 4, 2017
|
|
Adjustments for Adoption of
|
|
Three Months Ended August 4, 2017
|
||||||
|
|
(as reported)
|
|
ASC 606
|
|
(as adjusted)
|
||||||
Net revenue
|
|
$
|
116,123
|
|
|
$
|
117
|
|
|
$
|
116,240
|
|
Cost of revenue
|
|
56,325
|
|
|
(418
|
)
|
|
55,907
|
|
|||
Gross margin
|
|
59,798
|
|
|
535
|
|
|
60,333
|
|
|||
Total operating expenses
|
|
78,451
|
|
|
(2,187
|
)
|
|
76,264
|
|
|||
Operating loss
|
|
(18,653
|
)
|
|
2,722
|
|
|
(15,931
|
)
|
|||
Interest and other, net
|
|
(425
|
)
|
|
5
|
|
|
(420
|
)
|
|||
Income tax benefit
|
|
(6,960
|
)
|
|
880
|
|
|
(6,080
|
)
|
|||
Net loss
|
|
$
|
(12,118
|
)
|
|
$
|
1,847
|
|
|
$
|
(10,271
|
)
|
|
|
|
|
|
|
|
||||||
Net loss per common share (basic and diluted)
|
|
$
|
(0.15
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.13
|
)
|
|
|
Six Months Ended August 4, 2017
|
|
Adjustments for Adoption of
|
|
Six Months Ended August 4, 2017
|
||||||
|
|
(as reported)
|
|
ASC 606
|
|
(as adjusted)
|
||||||
Net revenue
|
|
$
|
229,716
|
|
|
$
|
202
|
|
|
$
|
229,918
|
|
Cost of revenue
|
|
110,267
|
|
|
(747
|
)
|
|
109,520
|
|
|||
Gross margin
|
|
119,449
|
|
|
949
|
|
|
120,398
|
|
|||
Total operating expenses
|
|
158,503
|
|
|
(3,178
|
)
|
|
155,325
|
|
|||
Operating loss
|
|
(39,054
|
)
|
|
4,127
|
|
|
(34,927
|
)
|
|||
Interest and other, net
|
|
(1,074
|
)
|
|
5
|
|
|
(1,069
|
)
|
|||
Income tax benefit
|
|
(13,774
|
)
|
|
1,326
|
|
|
(12,448
|
)
|
|||
Net loss
|
|
$
|
(26,354
|
)
|
|
$
|
2,806
|
|
|
$
|
(23,548
|
)
|
|
|
|
|
|
|
|
||||||
Net loss per common share (basic and diluted)
|
|
$
|
(0.33
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.29
|
)
|
|
|
Six Months Ended August 4, 2017
|
|
Adjustments for Adoption
|
|
Adjustments for
|
|
Six Months Ended August 4, 2017
|
||||||||
|
|
(as reported)
|
|
of ASC 606
|
|
Revision
|
|
(as adjusted)
|
||||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
||||||||
Net loss
|
|
$
|
(26,354
|
)
|
|
$
|
2,806
|
|
|
$
|
—
|
|
|
$
|
(23,548
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
||||||||
Effects of exchange rate changes on monetary assets and liabilities denominated in foreign currencies
|
|
1,456
|
|
|
(7
|
)
|
|
—
|
|
|
1,449
|
|
||||
Income tax benefit
|
|
(15,098
|
)
|
|
2,650
|
|
|
—
|
|
|
(12,448
|
)
|
||||
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Other assets
|
|
606
|
|
|
(3,923
|
)
|
|
(697
|
)
|
|
(4,014
|
)
|
||||
Accounts payable
|
|
(269
|
)
|
|
—
|
|
|
697
|
|
|
428
|
|
||||
Deferred revenue
|
|
13,819
|
|
|
(202
|
)
|
|
—
|
|
|
13,617
|
|
||||
Accrued and other liabilities
|
|
(8,930
|
)
|
|
(1,324
|
)
|
|
—
|
|
|
(10,254
|
)
|
||||
Net cash provided by (used in) operating activities
|
|
$
|
(8,415
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(8,415
|
)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
August 3, 2018
|
|
August 4, 2017*
|
|
August 3, 2018
|
|
August 4, 2017*
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(9,769
|
)
|
|
$
|
(10,271
|
)
|
|
$
|
(23,588
|
)
|
|
$
|
(23,548
|
)
|
Denominator:
|
|
|
|
|
|
|
|
|
|
||||||
Weighted-average number of shares outstanding:
|
|
|
|
|
|
|
|
|
|||||||
Basic and Diluted
|
80,839
|
|
|
80,353
|
|
|
80,680
|
|
|
80,205
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Loss per common share:
|
|
|
|
|
|
|
|
|
|
||||||
Basic and Diluted
|
$
|
(0.12
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
(0.29
|
)
|
|
$
|
(0.29
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average anti-dilutive stock options, non-vested restricted stock and restricted stock units
|
5,285
|
|
|
4,750
|
|
|
5,390
|
|
|
4,900
|
|
|
|
As of February 2, 2018*
|
|
Upfront payments received and billings during the six months ended August 3, 2018
|
|
Revenue recognized during the six months ended August 3, 2018
|
|
As of August 3, 2018
|
||||||||
Deferred revenue
|
|
$
|
152,645
|
|
|
$
|
133,910
|
|
|
$
|
(121,292
|
)
|
|
$
|
165,263
|
|
|
|
Total
|
|
Expected to be recognized in the next 12 months
|
|
Expected to be recognized in 12-24 months
|
|
Expected to be recognized in 24-36 months
|
|
Expected to be recognized thereafter
|
||||||||||
Performance obligation - active
|
|
$
|
236,239
|
|
|
$
|
131,456
|
|
|
$
|
71,910
|
|
|
$
|
28,211
|
|
|
$
|
4,662
|
|
Performance obligation - backlog
|
|
$
|
41,381
|
|
|
$
|
13,920
|
|
|
$
|
13,920
|
|
|
$
|
12,277
|
|
|
$
|
1,264
|
|
Total
|
|
$
|
277,620
|
|
|
$
|
145,376
|
|
|
$
|
85,830
|
|
|
$
|
40,488
|
|
|
$
|
5,926
|
|
|
|
As of February 2, 2018
|
|
Amount capitalized
|
|
Amount recognized
|
|
As of August 3, 2018
|
||||||||
Deferred commissions
|
|
$
|
57,229
|
|
|
$
|
9,479
|
|
|
$
|
(7,089
|
)
|
|
$
|
59,619
|
|
Deferred fulfillment costs
|
|
10,163
|
|
|
3,281
|
|
|
(2,460
|
)
|
|
10,984
|
|
|
|
August 3, 2018
|
|
February 2, 2018
|
||||||||||||||||||||
|
|
Gross
|
|
Accumulated
Amortization
|
|
Net
|
|
Gross
|
|
Accumulated
Amortization
|
|
Net
|
||||||||||||
|
|
(in thousands)
|
||||||||||||||||||||||
Customer relationships
|
|
$
|
189,518
|
|
|
$
|
(70,105
|
)
|
|
$
|
119,413
|
|
|
$
|
189,518
|
|
|
$
|
(63,058
|
)
|
|
$
|
126,460
|
|
Technology
|
|
135,584
|
|
|
(64,799
|
)
|
|
70,785
|
|
|
135,584
|
|
|
(57,978
|
)
|
|
77,606
|
|
||||||
Finite-lived intangible assets
|
|
325,102
|
|
|
(134,904
|
)
|
|
190,198
|
|
|
325,102
|
|
|
(121,036
|
)
|
|
204,066
|
|
||||||
Trade name
|
|
30,118
|
|
|
—
|
|
|
30,118
|
|
|
30,118
|
|
|
—
|
|
|
30,118
|
|
||||||
Total intangible assets
|
|
$
|
355,220
|
|
|
$
|
(134,904
|
)
|
|
$
|
220,316
|
|
|
$
|
355,220
|
|
|
$
|
(121,036
|
)
|
|
$
|
234,184
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
August 3, 2018
|
|
August 4, 2017
|
|
August 3, 2018
|
|
August 4, 2017
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Loss before income taxes
|
$
|
(13,160
|
)
|
|
$
|
(16,351
|
)
|
|
$
|
(30,245
|
)
|
|
$
|
(35,996
|
)
|
Income tax benefit
|
$
|
(3,391
|
)
|
|
$
|
(6,080
|
)
|
|
$
|
(6,657
|
)
|
|
$
|
(12,448
|
)
|
Effective tax rate
|
25.8
|
%
|
|
37.2
|
%
|
|
22.0
|
%
|
|
34.6
|
%
|
|
|
August 3, 2018
|
|
February 2, 2018
|
||||
|
|
(in thousands)
|
||||||
Intercompany receivable
|
|
$
|
—
|
|
|
$
|
—
|
|
Intercompany payable
|
|
(17,467
|
)
|
|
(19,580
|
)
|
||
Net intercompany payable (in accrued and other)
|
|
$
|
(17,467
|
)
|
|
$
|
(19,580
|
)
|
|
|
|
|
|
||||
Accounts receivable from clients under reseller agreements with Dell (included in accounts receivable, net)
|
|
$
|
23,697
|
|
|
$
|
25,229
|
|
|
|
|
|
|
||||
Net operating loss tax sharing receivable under agreement with Dell (included in "Other current assets" and "Other non-current assets" at August 3, 2018 and in "Other current assets" at February 2, 2018)
|
|
$
|
23,895
|
|
|
$
|
21,380
|
|
•
|
Level 1 - Quoted market prices in active markets for identical assets or liabilities
|
•
|
Level 2 - Other observable market-based inputs or unobservable inputs that are corroborated by market data
|
•
|
Level 3 - Significant unobservable inputs
|
|
|
|
August 3,
2018 |
|
February 2, 2018
|
||||
|
|
|
Level 1
|
|
Level 1
|
||||
|
|
|
(in thousands)
|
||||||
Cash equivalents - Money Market Funds
|
|
$
|
34,275
|
|
|
$
|
58,967
|
|
•
|
prevent security breaches by fortifying their cyber defenses,
|
•
|
detect malicious activity,
|
•
|
respond rapidly to security breaches, and
|
•
|
predict emerging threats.
|
•
|
maintain and extend our technology leadership,
|
•
|
expand and diversify our client base,
|
•
|
deepen our existing client relationships, and
|
•
|
attract and retain top talent.
|
|
August 3, 2018
|
|
August 4, 2017
|
||||
Client base
|
4,300
|
|
|
4,400
|
|
||
Average revenue per client (in thousands)
|
$
|
100.4
|
|
|
$
|
89.2
|
|
Monthly recurring revenue (in millions)
|
$
|
36.2
|
|
|
$
|
32.3
|
|
Revenue retention rate
|
98
|
%
|
|
96
|
%
|
•
|
Impact of Purchase Accounting.
The impact of purchase accounting consists primarily of purchase accounting adjustments related to a change in the basis of deferred revenue related to the acquisition of Dell by Dell Technologies in fiscal 2014.
|
•
|
Amortization of Intangible Assets.
Amortization of intangible assets consists of amortization of customer relationships and acquired technology. In connection with the acquisition of Dell by Dell Technologies in fiscal 2014, all of our tangible and intangible assets and liabilities were accounted for and recognized at fair value on the transaction date.
|
•
|
Stock-based Compensation Expense.
Non-cash stock-based compensation relates to both the Dell Technologies and Secureworks equity plans. We exclude such expenses when assessing the effectiveness of our operating performance since stock-based compensation does not necessarily correlate with the underlying operating performance of the business.
|
•
|
Aggregate Adjustment for Income Taxes.
The aggregate adjustment for income taxes is the estimated combined income tax effect for the adjustments mentioned above. The tax effects are determined based on the tax jurisdictions where the above items were incurred.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
August 3, 2018
|
|
August 4, 2017*
|
|
August 3, 2018
|
|
August 4, 2017*
|
||||||||
|
(in thousands)
|
||||||||||||||
GAAP revenue
|
$
|
128,778
|
|
|
$
|
116,240
|
|
|
$
|
254,939
|
|
|
$
|
229,918
|
|
Impact of purchase accounting
|
—
|
|
|
146
|
|
|
—
|
|
|
292
|
|
||||
Non-GAAP revenue
|
$
|
128,778
|
|
|
$
|
116,386
|
|
|
$
|
254,939
|
|
|
$
|
230,210
|
|
|
|
|
|
|
|
|
|
||||||||
GAAP gross margin
|
$
|
66,230
|
|
|
$
|
60,333
|
|
|
$
|
131,861
|
|
|
$
|
120,398
|
|
Amortization of intangibles
|
3,411
|
|
|
3,411
|
|
|
6,821
|
|
|
6,821
|
|
||||
Impact of purchase accounting
|
—
|
|
|
156
|
|
|
—
|
|
|
312
|
|
||||
Stock-based compensation expense
|
275
|
|
|
217
|
|
|
544
|
|
|
441
|
|
||||
Non-GAAP gross margin
|
$
|
69,916
|
|
|
$
|
64,117
|
|
|
$
|
139,226
|
|
|
$
|
127,972
|
|
|
|
|
|
|
|
|
|
||||||||
GAAP research and development expenses
|
$
|
22,453
|
|
|
$
|
19,693
|
|
|
$
|
44,807
|
|
|
$
|
39,172
|
|
Stock-based compensation expense
|
(1,006
|
)
|
|
(759
|
)
|
|
(2,037
|
)
|
|
(1,573
|
)
|
||||
Non-GAAP research and development expenses
|
$
|
21,447
|
|
|
$
|
18,934
|
|
|
$
|
42,770
|
|
|
$
|
37,599
|
|
|
|
|
|
|
|
|
|
||||||||
GAAP sales and marketing expenses
|
$
|
35,521
|
|
|
$
|
35,433
|
|
|
$
|
71,191
|
|
|
$
|
71,611
|
|
Stock-based compensation expense
|
(720
|
)
|
|
(411
|
)
|
|
(1,341
|
)
|
|
(625
|
)
|
||||
Non-GAAP sales and marketing expenses
|
$
|
34,801
|
|
|
$
|
35,022
|
|
|
$
|
69,850
|
|
|
$
|
70,986
|
|
|
|
|
|
|
|
|
|
||||||||
GAAP general and administrative expenses
|
$
|
22,419
|
|
|
$
|
21,138
|
|
|
$
|
47,616
|
|
|
$
|
44,542
|
|
Amortization of intangibles
|
(3,523
|
)
|
|
(3,523
|
)
|
|
(7,047
|
)
|
|
(7,047
|
)
|
||||
Impact of purchase accounting
|
—
|
|
|
(256
|
)
|
|
—
|
|
|
(512
|
)
|
||||
Stock-based compensation expense
|
(2,911
|
)
|
|
(2,143
|
)
|
|
(5,720
|
)
|
|
(4,519
|
)
|
||||
Non-GAAP general and administrative expenses
|
$
|
15,985
|
|
|
$
|
15,216
|
|
|
$
|
34,849
|
|
|
$
|
32,464
|
|
|
|
|
|
|
|
|
|
||||||||
GAAP operating loss
|
$
|
(14,163
|
)
|
|
$
|
(15,931
|
)
|
|
$
|
(31,753
|
)
|
|
$
|
(34,927
|
)
|
Amortization of intangibles
|
6,934
|
|
|
6,934
|
|
|
13,868
|
|
|
13,868
|
|
||||
Impact of purchase accounting
|
—
|
|
|
412
|
|
|
—
|
|
|
824
|
|
||||
Stock-based compensation expense
|
4,912
|
|
|
3,530
|
|
|
9,642
|
|
|
7,158
|
|
||||
Non-GAAP operating loss
|
$
|
(2,317
|
)
|
|
$
|
(5,055
|
)
|
|
$
|
(8,243
|
)
|
|
$
|
(13,077
|
)
|
|
|
|
|
|
|
|
|
||||||||
GAAP net loss
|
$
|
(9,769
|
)
|
|
$
|
(10,271
|
)
|
|
$
|
(23,588
|
)
|
|
$
|
(23,548
|
)
|
Amortization of intangibles
|
6,934
|
|
|
6,934
|
|
|
13,868
|
|
|
13,868
|
|
||||
Impact of purchase accounting
|
—
|
|
|
412
|
|
|
—
|
|
|
824
|
|
||||
Stock-based compensation expense
|
4,912
|
|
|
3,530
|
|
|
9,642
|
|
|
7,158
|
|
||||
Aggregate adjustment for income taxes
|
(2,938
|
)
|
|
(4,122
|
)
|
|
(5,329
|
)
|
|
(7,356
|
)
|
||||
Non-GAAP net loss
|
$
|
(861
|
)
|
|
$
|
(3,517
|
)
|
|
$
|
(5,407
|
)
|
|
$
|
(9,054
|
)
|
|
|
|
|
|
|
|
|
GAAP net loss per share
|
$
|
(0.12
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
(0.29
|
)
|
|
$
|
(0.29
|
)
|
Amortization of intangibles
|
0.09
|
|
|
0.09
|
|
|
0.17
|
|
|
0.17
|
|
||||
Impact of purchase accounting
|
—
|
|
|
0.01
|
|
|
—
|
|
|
0.01
|
|
||||
Stock-based compensation expense
|
0.06
|
|
|
0.04
|
|
|
0.12
|
|
|
0.09
|
|
||||
Aggregate adjustment for income taxes
|
(0.04
|
)
|
|
(0.05
|
)
|
|
(0.07
|
)
|
|
(0.09
|
)
|
||||
Non-GAAP net loss per share *
|
$
|
(0.01
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.11
|
)
|
* Sum of reconciling items may differ from total due to rounding of individual components
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
||||||||
GAAP net loss
|
$
|
(9,769
|
)
|
|
$
|
(10,271
|
)
|
|
$
|
(23,588
|
)
|
|
$
|
(23,548
|
)
|
Interest and other, net
|
(1,003
|
)
|
|
420
|
|
|
(1,508
|
)
|
|
1,069
|
|
||||
Income tax benefit
|
(3,391
|
)
|
|
(6,080
|
)
|
|
(6,657
|
)
|
|
(12,448
|
)
|
||||
Depreciation and amortization
|
10,225
|
|
|
10,405
|
|
|
20,512
|
|
|
20,666
|
|
||||
Stock-based compensation expense
|
4,912
|
|
|
3,530
|
|
|
9,642
|
|
|
7,158
|
|
||||
Impact of purchase accounting
|
—
|
|
|
146
|
|
|
—
|
|
|
292
|
|
||||
Adjusted EBITDA
|
$
|
974
|
|
|
$
|
(1,850
|
)
|
|
$
|
(1,599
|
)
|
|
$
|
(6,811
|
)
|
▪
|
Research and Development, or R&D, Expenses.
Research and development expenses include compensation and related expenses for the continued development of our solutions offerings, including a portion of expenses related to our threat research team, which focuses on the identification of system vulnerabilities, data forensics and malware analysis. R&D expenses also encompass expenses related to the development of prototypes of new solutions offerings and allocated overhead. Our solutions offerings have generally been developed internally. We operate in a competitive and highly technical industry. Therefore, to maintain and extend our technology leadership, we intend to continue to invest in our R&D efforts by hiring more personnel to enhance our existing security solutions and to add complementary solutions.
|
•
|
Sales and Marketing, or S&M, Expenses.
Sales and marketing expenses include salaries, sales commissions and performance-based compensation benefits and related expenses for our S&M personnel, travel and entertainment, marketing and advertising programs (including lead generation), client advocacy events, and other brand-building expenses, as well as allocated overhead.
|
▪
|
General and Administrative, or G&A, Expenses.
General and administrative expenses include primarily the costs of human resources and recruiting, finance and accounting, legal support, information management and information security systems, facilities management, corporate development and other administrative functions, and are partially offset by allocations of information technology and facilities costs to other functions.
|
|
|
Three Months Ended
|
|||||||||||||||
|
|
August 3, 2018
|
|
|
|
August 4, 2017
|
|||||||||||
|
|
$
|
|
% of
Revenue |
|
%
Change |
|
$
|
|
% of
Revenue |
|||||||
|
|
(in thousands, except percentages)
|
|||||||||||||||
Net revenue
|
|
$
|
128,778
|
|
|
100.0
|
%
|
|
10.8
|
%
|
|
$
|
116,240
|
|
|
100.0
|
%
|
Cost of revenue
|
|
$
|
62,548
|
|
|
48.6
|
%
|
|
11.9
|
%
|
|
$
|
55,907
|
|
|
48.1
|
%
|
Total gross margin
|
|
$
|
66,230
|
|
|
51.4
|
%
|
|
9.8
|
%
|
|
$
|
60,333
|
|
|
51.9
|
%
|
Operating expenses
|
|
$
|
80,393
|
|
|
62.4
|
%
|
|
5.4
|
%
|
|
$
|
76,264
|
|
|
65.6
|
%
|
Operating loss
|
|
$
|
(14,163
|
)
|
|
(11.0
|
)%
|
|
(11.1
|
)%
|
|
$
|
(15,931
|
)
|
|
(13.7
|
)%
|
Net loss
|
|
$
|
(9,769
|
)
|
|
(7.6
|
)%
|
|
(4.9
|
)%
|
|
$
|
(10,271
|
)
|
|
(8.8
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Other Financial Information
(1)
|
|
|
|
|
|
|
|
|
|
|
|||||||
Non-GAAP net revenue
|
|
$
|
128,778
|
|
|
100.0
|
%
|
|
10.6
|
%
|
|
$
|
116,386
|
|
|
100.0
|
%
|
Non-GAAP cost of revenue
|
|
$
|
58,862
|
|
|
45.7
|
%
|
|
12.6
|
%
|
|
$
|
52,269
|
|
|
44.9
|
%
|
Non-GAAP gross margin
|
|
$
|
69,916
|
|
|
54.3
|
%
|
|
9.0
|
%
|
|
$
|
64,117
|
|
|
55.1
|
%
|
Non-GAAP operating expenses
|
|
$
|
72,233
|
|
|
56.1
|
%
|
|
4.4
|
%
|
|
$
|
69,172
|
|
|
59.4
|
%
|
Non-GAAP operating loss
|
|
$
|
(2,317
|
)
|
|
(1.8
|
)%
|
|
(54.2
|
)%
|
|
$
|
(5,055
|
)
|
|
(4.3
|
)%
|
Non-GAAP net loss
|
|
$
|
(861
|
)
|
|
(0.7
|
)%
|
|
(75.5
|
)%
|
|
$
|
(3,517
|
)
|
|
(3.0
|
)%
|
Adjusted EBITDA
|
|
$
|
974
|
|
|
0.8
|
%
|
|
(152.6
|
)%
|
|
$
|
(1,850
|
)
|
|
(1.6
|
)%
|
|
|
Six Months Ended
|
|||||||||||||||
|
|
August 3, 2018
|
|
|
|
August 4, 2017
|
|||||||||||
|
|
$
|
|
% of
Revenue |
|
%
Change |
|
$
|
|
% of
Revenue |
|||||||
|
|
(in thousands, except percentages)
|
|||||||||||||||
Net revenue
|
|
$
|
254,939
|
|
|
100.0
|
%
|
|
10.9
|
%
|
|
$
|
229,918
|
|
|
100.0
|
%
|
Cost of revenue
|
|
$
|
123,078
|
|
|
48.3
|
%
|
|
12.4
|
%
|
|
$
|
109,520
|
|
|
47.6
|
%
|
Total gross margin
|
|
$
|
131,861
|
|
|
51.7
|
%
|
|
9.5
|
%
|
|
$
|
120,398
|
|
|
52.4
|
%
|
Operating expenses
|
|
$
|
163,614
|
|
|
64.2
|
%
|
|
5.3
|
%
|
|
$
|
155,325
|
|
|
67.6
|
%
|
Operating loss
|
|
$
|
(31,753
|
)
|
|
(12.5
|
)%
|
|
(9.1
|
)%
|
|
$
|
(34,927
|
)
|
|
(15.2
|
)%
|
Net loss
|
|
$
|
(23,588
|
)
|
|
(9.3
|
)%
|
|
0.2
|
%
|
|
$
|
(23,548
|
)
|
|
(10.2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Other Financial Information
(1)
|
|
|
|
|
|
|
|
|
|
|
|||||||
Non-GAAP net revenue
|
|
$
|
254,939
|
|
|
100.0
|
%
|
|
10.7
|
%
|
|
$
|
230,210
|
|
|
100.0
|
%
|
Non-GAAP cost of revenue
|
|
$
|
115,713
|
|
|
45.4
|
%
|
|
13.2
|
%
|
|
$
|
102,238
|
|
|
44.4
|
%
|
Non-GAAP gross margin
|
|
$
|
139,226
|
|
|
54.6
|
%
|
|
8.8
|
%
|
|
$
|
127,972
|
|
|
55.6
|
%
|
Non-GAAP operating expenses
|
|
$
|
147,469
|
|
|
57.8
|
%
|
|
4.6
|
%
|
|
$
|
141,049
|
|
|
61.3
|
%
|
Non-GAAP operating loss
|
|
$
|
(8,243
|
)
|
|
(3.2
|
)%
|
|
(37.0
|
)%
|
|
$
|
(13,077
|
)
|
|
(5.7
|
)%
|
Non-GAAP net loss
|
|
$
|
(5,407
|
)
|
|
(2.1
|
)%
|
|
(40.3
|
)%
|
|
$
|
(9,054
|
)
|
|
(3.9
|
)%
|
Adjusted EBITDA
|
|
$
|
(1,599
|
)
|
|
(0.6
|
)%
|
|
(76.5
|
)%
|
|
$
|
(6,811
|
)
|
|
(3.0
|
)%
|
(1)
|
See "Non-GAAP Financial Measures" and "Reconciliation of Non-GAAP Financial Measures" for more information about these non-GAAP financial measures, including our reasons for including the measures, material limitations with respect to the usefulness of the measures, and a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure. Non-GAAP financial measures as a percentage of revenue are calculated based on non-GAAP revenue.
|
|
Three Months Ended
|
|||||||||||||||
|
August 3, 2018
|
|
|
|
August 4, 2017*
|
|||||||||||
|
Dollars
|
|
% of
Revenue |
|
%
Change |
|
Dollars
|
|
% of
Revenue |
|||||||
|
(in thousands, except percentages)
|
|||||||||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Research and development
|
$
|
22,453
|
|
|
17.4
|
%
|
|
14.0
|
%
|
|
$
|
19,693
|
|
|
16.9
|
%
|
Sales and marketing
|
35,521
|
|
|
27.6
|
%
|
|
0.2
|
%
|
|
35,433
|
|
|
30.5
|
%
|
||
General and administrative
|
22,419
|
|
|
17.4
|
%
|
|
6.1
|
%
|
|
21,138
|
|
|
18.2
|
%
|
||
Total operating expenses
|
$
|
80,393
|
|
|
62.4
|
%
|
|
5.4
|
%
|
|
$
|
76,264
|
|
|
65.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||
Other Financial Information
|
|
|
|
|
|
|
|
|
|
|||||||
Non-GAAP research and development
|
$
|
21,447
|
|
|
16.7
|
%
|
|
13.3
|
%
|
|
$
|
18,934
|
|
|
16.3
|
%
|
Non-GAAP sales and marketing
|
34,801
|
|
|
27.0
|
%
|
|
(0.6
|
)%
|
|
35,022
|
|
|
30.1
|
%
|
||
Non-GAAP general and administrative
|
15,985
|
|
|
12.4
|
%
|
|
5.1
|
%
|
|
15,216
|
|
|
13.1
|
%
|
||
Non-GAAP operating expenses
(1)
|
$
|
72,233
|
|
|
56.1
|
%
|
|
4.4
|
%
|
|
$
|
69,172
|
|
|
59.4
|
%
|
|
Six Months Ended
|
|||||||||||||||
|
August 3, 2018
|
|
|
|
August 4, 2017*
|
|||||||||||
|
Dollars
|
|
% of
Revenue |
|
%
Change |
|
Dollars
|
|
% of
Revenue |
|||||||
|
(in thousands, except percentages)
|
|||||||||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Research and development
|
$
|
44,807
|
|
|
17.6
|
%
|
|
14.4
|
%
|
|
$
|
39,172
|
|
|
17.0
|
%
|
Sales and marketing
|
71,191
|
|
|
27.9
|
%
|
|
(0.6
|
)%
|
|
71,611
|
|
|
31.1
|
%
|
||
General and administrative
|
47,616
|
|
|
18.7
|
%
|
|
6.9
|
%
|
|
44,542
|
|
|
19.4
|
%
|
||
Total operating expenses
|
$
|
163,614
|
|
|
64.2
|
%
|
|
5.3
|
%
|
|
$
|
155,325
|
|
|
67.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||
Other Financial Information
|
|
|
|
|
|
|
|
|
|
|||||||
Non-GAAP research and development
|
$
|
42,770
|
|
|
16.8
|
%
|
|
13.8
|
%
|
|
$
|
37,599
|
|
|
16.3
|
%
|
Non-GAAP sales and marketing
|
69,850
|
|
|
27.4
|
%
|
|
(1.6
|
)%
|
|
70,986
|
|
|
30.8
|
%
|
||
Non-GAAP general and administrative
|
34,849
|
|
|
13.7
|
%
|
|
7.3
|
%
|
|
32,464
|
|
|
14.1
|
%
|
||
Non-GAAP operating expenses
(1)
|
$
|
147,469
|
|
|
57.8
|
%
|
|
4.6
|
%
|
|
$
|
141,049
|
|
|
61.3
|
%
|
(1)
|
See "Non-GAAP Financial Measures" and "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure.
|
|
August 3,
2018 |
|
February 2, 2018
|
||||
|
(in thousands)
|
||||||
|
|
|
|
|
|||
Cash and cash equivalents
|
$
|
103,316
|
|
|
$
|
101,539
|
|
Accounts receivable, net
|
$
|
133,344
|
|
|
$
|
157,764
|
|
|
|
Six Months Ended
|
||||||
|
|
August 3, 2018
|
|
August 4, 2017
|
||||
|
|
(in thousands)
|
||||||
Net change in cash from:
|
|
|
|
|
|
|
||
Operating activities
|
|
$
|
10,886
|
|
|
$
|
(8,415
|
)
|
Investing activities
|
|
(5,366
|
)
|
|
(8,376
|
)
|
||
Financing activities
|
|
(3,743
|
)
|
|
(2,024
|
)
|
||
Change in cash and cash equivalents
|
|
$
|
1,777
|
|
|
$
|
(18,815
|
)
|
Exhibit No.
|
|
Description
|
10.1
|
|
|
10.2
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
101.INS
|
|
XBRL Instance Document.
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB
|
|
XBRL Taxonomy Extension Labels Linkbase Document.
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
|
SecureWorks Corp.
|
|
|
|
|
|
By:
|
/s/ R. Wayne Jackson
|
|
|
R. Wayne Jackson
|
|
|
Chief Financial Officer
|
|
|
(Duly Authorized Officer)
|
|
DELL INC.
By:
/s/ Janet Bawcom
Name: Janet Bawcom
Title: Senior Vice President & Assistant Secretary
|
|
SECUREWORKS CORP.
By:
/s/ George B. Hanna
Name: George B. Hanna
Title: Chief Legal Officer & Corporate Secretary
|
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of SecureWorks Corp.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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September 5, 2018
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/s/ Michael R. Cote
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|
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Michael R. Cote
|
|
|
President and Chief Executive Officer
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1.
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I have reviewed this quarterly report on Form 10-Q of SecureWorks Corp.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
1.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
4.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
September 5, 2018
|
|
/s/ R. Wayne Jackson
|
|
|
R. Wayne Jackson
|
|
|
Chief Financial Officer
|
1.
|
The quarterly report on Form 10-Q of the Company for the quarter ended
August 3, 2018
fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in such quarterly report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
September 5, 2018
|
|
/s/ Michael R. Cote
|
|
|
|
Michael R. Cote
|
|
|
|
President and Chief Executive Officer
|
Date:
|
September 5, 2018
|
|
/s/ R. Wayne Jackson
|
|
|
|
R. Wayne Jackson
|
|
|
|
Chief Financial Officer
|