On this page of StockholderLetter.com we present the 5/17/2023 shareholder letter from SecureWorks Corp — ticker symbol SCWX. Reading current and past SCWX letters to shareholders can bring important insights into the investment thesis.
May 17, 2023
Dear Secureworks 6takeholder:
In 2022, we accelerated the transformation of our company with our Taegis    XDR platform, the next generation of
cybersecurity technology. To fulfill our company Purpose to Secure Human Progress, Secureworks is taking a
proactive, data-science driven approach to cyber defense, enabling organizations to bolster their security posture
with the power of Secureworks    technology and security expertise. We delivered Taegis revenue growth of 120%
during fiscal year 2023, and ended the year with more than 80% of our annual recurring revenue (ARR) from Taegis
solutions.
Securing our Customers
Our top priority is enabling our customers and partners to fulfill their missions by keeping them secure, and we
partner with thousands of organizations responsible for the health, livelihood, and prosperity of the communities
they serve. Governments, businesses, and individuals are all subject to a relentless, sophisticated, and complex threat
landscape, and cannot solve their security challenges with either people or point solutions alone. All face the need
to secure a broader and more porous attack surface, driven by the continued migration of critical data workloads to
cloud applications and transformation of their digital presence in support of a hybrid workforce. Regulatory scrutiny
of cyber security rigor and compliance are increasing, and most organizations don't have the necessary level and
diversity of cybersecurity expertise in-house.
We designed Taegis to address these challenges by seamlessly securing the diversity and complexity of evolving
customer technology environments and leveraging our deep expertise and threat intelligence data.
Innovation and Transformation
The decision to make our strategic shift and invest in the next generation of security technology began with our
recognition of the need for greater collaboration and innovation as a community. Secureworks is a product-led
Software-as-a-Service, or SaaS, company with $261 million of ARR from Taegis, representing over 80% of our total
ARR as of year-end fiscal 2023, up from 42% of the total at the end of the previous year. Since launching Taegis in
2020, we   ve delivered a 3-year compound annual growth rate of 156% in Taegis ARR, and 2,000 Taegis customers
are now seeing the benefits of our XDR-based approach to managed detection and response.
Security is a big data challenge     and opportunity     and we continue to innovate to outpace and outmaneuver the
adversary. With thousands of security investigations and incident response activities each year, our platform
leverages these insights to create machine-readable threat intelligence that updates our detectors every hour of every
day. The quantity and quality of data drive machine-learning model performance, creating that virtuous cycle of
protection for all. Taegis powers the critical ability to detect and respond with unmatched speed in real time, reduces
alert noise, prevents threat actors from lingering in blind spots, and enables rapid high-fidelity response to prevent
costly breaches.
The Taegis platform also was designed for optionality around who manages detection and response activities, giving
organizations flexibility and choice in the design of their security program management. Last year, we announced
our commitment to    Partner First,    elevating our collaboration with critical managed service and solution providers,
as well as technology alliance partners.
As we complete the sunset of several non-strategic service lines, we have been actively aligning our expense base to
our new, go-forward business, benefiting from the scaled, higher margin solutions on the Taegis platform. With the
growth and scale of Taegis, and our ability to reduce duplicative costs, we are on a path to profitable growth.
Our Commitment to ESG
As we have transformed our business, we have continually shown our commitment to sustainability, social
responsibility, and corporate governance. There is no doubt that cultural diversity fosters creativity, increases
collaboration, and enhances innovation in how we protect customers. We are proud of our 8% year-over-year
increase in diverse representation in our workforce.
Fiscal year 2023 was also marked by several achievements in our governance practices, as we continue to pride
ourselves on setting a tone of accountability to ensure financial reporting controls remain effective. Above all else,
we are grateful to work with one of the world   s great cybersecurity teams, whose spirit and dedication inspire us
every day. Thank you to our Board and teammates around the globe for their diligence and integrity, engraining
compliance into all we do.
On behalf of the entire Secureworks team, we thank you for investing in our vision to transform security as Taegis
defines the future of threat detection and analysis and drives superior long-term and sustainable growth and value
creation for investors. We look forward to our continued partnership in 2023 and beyond.
Sincerely,
Wendy K. Thomas,
Chief Executive Officer
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 • shareholder letter icon 5/17/2023 Letter Continued (Full PDF)
 • stockholder letter icon 5/15/2024 SCWX Stockholder Letter
 • stockholder letter icon More "Application Software" Category Stockholder Letters
 • Benford's Law Stocks icon SCWX Benford's Law Stock Score = 54


SCWX 5/17/2023 Shareholder/Stockholder Letter Transcript:

May 17, 2023
Dear Secureworks 6takeholder:
In 2022, we accelerated the transformation of our company with our Taegis    XDR platform, the next generation of
cybersecurity technology. To fulfill our company Purpose to Secure Human Progress, Secureworks is taking a
proactive, data-science driven approach to cyber defense, enabling organizations to bolster their security posture
with the power of Secureworks    technology and security expertise. We delivered Taegis revenue growth of 120%
during fiscal year 2023, and ended the year with more than 80% of our annual recurring revenue (ARR) from Taegis
solutions.
Securing our Customers
Our top priority is enabling our customers and partners to fulfill their missions by keeping them secure, and we
partner with thousands of organizations responsible for the health, livelihood, and prosperity of the communities
they serve. Governments, businesses, and individuals are all subject to a relentless, sophisticated, and complex threat
landscape, and cannot solve their security challenges with either people or point solutions alone. All face the need
to secure a broader and more porous attack surface, driven by the continued migration of critical data workloads to
cloud applications and transformation of their digital presence in support of a hybrid workforce. Regulatory scrutiny
of cyber security rigor and compliance are increasing, and most organizations don't have the necessary level and
diversity of cybersecurity expertise in-house.
We designed Taegis to address these challenges by seamlessly securing the diversity and complexity of evolving
customer technology environments and leveraging our deep expertise and threat intelligence data.
Innovation and Transformation
The decision to make our strategic shift and invest in the next generation of security technology began with our
recognition of the need for greater collaboration and innovation as a community. Secureworks is a product-led
Software-as-a-Service, or SaaS, company with $261 million of ARR from Taegis, representing over 80% of our total
ARR as of year-end fiscal 2023, up from 42% of the total at the end of the previous year. Since launching Taegis in
2020, we   ve delivered a 3-year compound annual growth rate of 156% in Taegis ARR, and 2,000 Taegis customers
are now seeing the benefits of our XDR-based approach to managed detection and response.
Security is a big data challenge     and opportunity     and we continue to innovate to outpace and outmaneuver the
adversary. With thousands of security investigations and incident response activities each year, our platform
leverages these insights to create machine-readable threat intelligence that updates our detectors every hour of every
day. The quantity and quality of data drive machine-learning model performance, creating that virtuous cycle of
protection for all. Taegis powers the critical ability to detect and respond with unmatched speed in real time, reduces
alert noise, prevents threat actors from lingering in blind spots, and enables rapid high-fidelity response to prevent
costly breaches.
The Taegis platform also was designed for optionality around who manages detection and response activities, giving
organizations flexibility and choice in the design of their security program management. Last year, we announced
our commitment to    Partner First,    elevating our collaboration with critical managed service and solution providers,
as well as technology alliance partners.
As we complete the sunset of several non-strategic service lines, we have been actively aligning our expense base to
our new, go-forward business, benefiting from the scaled, higher margin solutions on the Taegis platform. With the
growth and scale of Taegis, and our ability to reduce duplicative costs, we are on a path to profitable growth.
Our Commitment to ESG
As we have transformed our business, we have continually shown our commitment to sustainability, social
responsibility, and corporate governance. There is no doubt that cultural diversity fosters creativity, increases

collaboration, and enhances innovation in how we protect customers. We are proud of our 8% year-over-year
increase in diverse representation in our workforce.
Fiscal year 2023 was also marked by several achievements in our governance practices, as we continue to pride
ourselves on setting a tone of accountability to ensure financial reporting controls remain effective. Above all else,
we are grateful to work with one of the world   s great cybersecurity teams, whose spirit and dedication inspire us
every day. Thank you to our Board and teammates around the globe for their diligence and integrity, engraining
compliance into all we do.
On behalf of the entire Secureworks team, we thank you for investing in our vision to transform security as Taegis
defines the future of threat detection and analysis and drives superior long-term and sustainable growth and value
creation for investors. We look forward to our continued partnership in 2023 and beyond.
Sincerely,
Wendy K. Thomas,
Chief Executive Officer
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shareholder letter icon 5/17/2023 Letter Continued (Full PDF)
 

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