Q1 2025 SecureWorks Corp Earnings Call

Operator: Hello everyone, and thank you for standing by. The SecureWorks First Quarter Fiscal 2025 Earnings Conference Call will be beginning in just a few minutes. If you would like to ask a question during the presentation, you can do so by pressing start followed by the number one on your telephone keypad. We thank you for your patience, and we will begin shortly.

Hello, everyone and thank you for standing by.

Speaker Change: <unk> first quarter fiscal 2025 earnings conference call will be beginning in just a few minutes time, if you'd like to ask a question. During the presentation that you can do so by pressing star followed by the number one on your telephone keypad.

Speaker Change: Thank you for your patience and we will begin shortly.

Speaker Change: [music].

Operator: ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good morning, my name is Emily and I'll be your conference operator today. At this time I would like to welcome everyone to the SecureWorks First Quarter Fiscal 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise.

Speaker Change: Good morning, My name is M&A and I'll be your country afraid to say at this time I would like to welcome everyone to the secure works first quarter of fiscal 2025 earnings conference call all.

Speaker Change: All lines have been placed on mute to prevent any background noise I stopped pimento slide presentation to accompany the prepared remarks can be found on the company's website.

Speaker Change: After the Speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question. Please press star followed by case. Thank you.

Operator: A supplemental slide presentation to accompany the prepared remarks can be found on the company's website. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press start followed by the number one on your telephone keypad. If you would like to withdraw your question, please press start followed by two. Thank you. At this time, I would like to turn over the call to Kevin Toomey, SecureWorks Vice President of Investor Relations. Mr. Toomey, you may begin your conference. Thank you all.

Speaker Change: At this time I would like to turn over the course, you Kevin Toomey secure works Vice President of Investor Relations. Mr. <unk> you may begin your conference.

Kevin J. Toomey: Thank you, Operator. Good morning, and welcome to SecureWorks' first quarter fiscal 2025 earnings call. Joining me today are Wendy Thomas, our Chief Executive Officer, and Alpana Wegner, our Chief Financial Officer. During this call, unless otherwise indicated, we will reference non-GAAP financial measures. You will find the reconciliations between these GAAP and non-GAAP measures in the press release and presentation posted on our website earlier today. Finally, I'd like to remind you that all statements made during this call that relate to future results and events are forward-looking statements based on current expectations.

Kevin J. Toomey: Thank you operator, good morning, and welcome to secure works first quarter fiscal 2025 earnings call. Joining me today are Wendy Thomas our Chief Executive Officer, and El Paso, Wagner, our Chief Financial Officer.

Speaker Change: During this call unless otherwise indicated we will reference non-GAAP financial measures you will find the reconciliations between these GAAP and non-GAAP measures in the press release and presentation posted on our website earlier today.

Kevin J. Toomey: Actual results and events could differ materially from those projected due to a number of risks and uncertainties, which are discussed in our press release, web deck, and SEC filings, which you can also find on the Investor Relations website at investors.secureworks.com. We assume no obligation to update our forward-looking statements. With that, I'll turn the call over to SecureWorks CEO Wendy Thomas.

Speaker Change: Finally, I'd like to remind you that all statements made during this call that relate to future results and events are forward looking statements based on current expectations.

Actual results and events could differ materially from those projected due to a number of risks and uncertainties, which are discussed in our press release web deck and SEC filings, which you can also find at the Investor Relations website at investors don't secure works Dot com, we assume no obligation to update our forward looking statements with that.

Speaker Change: I'll turn the call over to secure work CEO Wendy Thomas.

Speaker Change: Yeah.

Wendy K. Thomas: Thank you, Kevin, and welcome, everyone. We reached a significant positive milestone with the close of the first quarter. This moment was several years in the making, as we executed against our strategy to transform our business from a pure play services company into a product-led SaaS business as the foundation for long-term growth and success. We delivered on this transformation in our committed timeframe while delivering even better security outcomes to our customers as a result.

Speaker Change: Thank you, Kevin and welcome everyone.

Wendy K. Thomas: We reached a significant positive milestone with the close the first quarter.

Wendy K. Thomas: At this moment with several years in the making as we executed against our strategy to transform our business from a pure play services company into a product led SaaS business as the foundation for long term growth and success.

Wendy K. Thomas: We delivered on this transformation and are committed timeframe, while delivering even better security outcomes to our customers as a result.

Wendy K. Thomas: We are pleased to move past the financial headwinds from the sunsetting of our non-strategic lines of business going forward. Our Tata business continued its strong momentum in the first quarter, as Tejas revenue grew 10% year-over-year to $69 million. Tejas annual recurring revenue, or ARR, now stands at $287 million.

Wendy K. Thomas: We are pleased to move past the financial headwinds from the sunsetting of our non strategic lines of business going forward.

Wendy K. Thomas: Our kgs business continued its strong momentum in first quarter.

Wendy K. Thomas: Tejas revenue grew 10% year over year to 69 million.

Wendy K. Thomas: Tejas annual recurring revenue or a R. R now stands at $287 million.

Wendy K. Thomas: And we delivered Q1 total revenue and adjusted EBITDA above our guidance range. It's important for me to also recognize our progress on profitability. We continue to see further opportunities to benefit from the scale our business model offers, and we remain committed to delivering positive adjusted EBITDA for the full fiscal year. This quarter, we launched new Tejas modules and capabilities and announced a major global partner. Importantly, our unique OpenXDR-based approach is increasingly receiving accolades from the market.

Wendy K. Thomas: And we delivered Q1 total revenue and adjusted EBITDA above our guidance ranges.

Wendy K. Thomas: It's important for me to also recognize our progress on profitability.

Wendy K. Thomas: We continue to see further opportunities to benefit from our scale our business model offers.

Wendy K. Thomas: And we remain committed to delivering positive adjusted EBITDA for the full fiscal year.

Wendy K. Thomas: This quarter, we launched new Tejas modules and capabilities and announced major global partners.

Wendy K. Thomas: Accordingly, our unique open xdr based approach is increasingly receiving accolades by the market.

Wendy K. Thomas: This quarter, we were recognized by Frost and Sullivan as a leader in the 2024 MDR Radar for our understanding of the industry, customer demands, and for taking a collaborative approach, positioning us as one of the most innovative companies in the space. Our efforts have set us up to drive sustained growth with a business model that has a proven ability to scale, underpinned by our unique cloud architecture and advanced automation and AI capabilities. Specifically, for the first quarter, I'll highlight several important results.

Wendy K. Thomas: This quarter, we were recognized by Frost and Sullivan.

Wendy K. Thomas: And the 'twenty 'twenty four M D R radar.

Wendy K. Thomas: For our understanding of the industry customer demands and for taking a collaborative approach position.

Wendy K. Thomas: Positioning us as one of the most innovative companies in the space.

Wendy K. Thomas: Our efforts have set us up to drive sustained growth with a business model that has a proven ability to scale.

Speaker Change: Underpinned by our unique cloud architecture, and advanced automation and AI capabilities.

Wendy K. Thomas: We delivered expanding gross margins, with Tejas gross margins improving 430 basis points year over year. We added marquee global partners who recognize the strength of CAGIS in our security expertise and who further broaden our reach and expand our addressable market. We launched two Tejas modules. New products propel expansion and retention with our customers and allow us to further increase our industry-leading Tejas average revenue per customer of $145,000.

Speaker Change: Specifically for first quarter I'll highlight several important results.

Speaker Change: We delivered expanding gross margins with changes gross margins, improving 430 basis points year over year.

Speaker Change: We added marquee global partners, who recognize the strength of changes in our security expertise.

Speaker Change: And who further broaden our reach and expand our addressable market.

Speaker Change: We launched two tejas modules.

Speaker Change: New products propel expansion and retention with our customers and allow us to further increase our industry, leading tejas average revenue per customer of $145000.

Speaker Change: Yeah.

Wendy K. Thomas: With our other MSS business reaching end of life, we can be singularly focused. All of our go-to-market and product development resources are focused on our go-forward business, with the opportunity to accelerate innovation even further through both add-on and native security products within the R&D envelope. To that end, we made two significant product advancements for our customers in the first quarter. First, NDR, Network Detection and Response. For context, the dominance of cloud applications and the hybrid workforce, with the growing return to office, have created a surge in network traffic, up over 20% in the last year.

Speaker Change: With our other MSS business, reaching end of life, we can be singularly focused.

Speaker Change: All of our go to market and product development resources are focused on our go forward business with the opportunity to accelerate innovation, even further through both add on and native security products within the R&D envelope.

Speaker Change: Yes.

Speaker Change: To that end, we made two significant product advancements for our customers in first quarter.

Speaker Change: First N D. Our network detection and response.

Speaker Change: For context, the dominance of cloud applications and hybrid Workforces with a growing return to office have created a surge in network traffic up over 20% in the last year.

Wendy K. Thomas: Adversaries are taking advantage of these increased volumes to lurk unseen and slip past cyber defenses. With threat actors obfuscating their behavior, legacy network controls, such as IDPs and firewalls, are no longer able to keep pace nor offer sufficient protection against evolving adversarial tactics.

Speaker Change: And for series are taking advantage of these increased volumes to lurk unseen and slipped past cyber defenses.

Speaker Change: With threat actors I'm, just getting their behavior legacy network controls such as diabetes and firewalls are no longer able to keep pace nor offer sufficient protection against evolving nonferrous aerial tactics.

Wendy K. Thomas: This quarter, we launched Tejas Network Detection and Response to help organizations protect against these threats. SecureWorks NDR closes the gap to detect network-based attacks and anomalous insider threats and comply with the ever-growing audit and compliance requirements. Tejas NDR furthers Tejas' defense in-depth approach with a full prevent, detect, and respond set of capabilities. The key differentiation of Tejas NDR lies in its design to add context to the detection of adversarial behavior and stop threat actors from traversing the network with no interruption to business traffic.

Speaker Change: This quarter, we launched Tejas network detection and response to help organizations protect against these threats.

Speaker Change: Secure works and Dr closes the gap to detect network based attacks and anomalous insider threats and comply with the ever growing audit and compliance requirements.

Speaker Change: Pages and they are further stages as defense in depth approach with a full prevent detect and respond set of capabilities.

Speaker Change: The key differentiation of Tejas N D. R lies in its design to add context to the detection of adversarial behaviour and stop threat actors from traversing the network with no interruption to business traffic.

Wendy K. Thomas: NDR provides a complete picture of all internal traffic, not only moving between endpoints but also traffic entering and exiting the network at the edge, with added visibility into hypervisor attacks, all managed centrally within the Tejas UI. Endpoint solutions alone are not sufficient.

Speaker Change: Dr provides a complete picture of all internal traffic not only moving between unemployment, but also traffic entering and exiting the network at the edge with added visibility into Hypervisor attacks, all managed centrally within the tedious UI.

Speaker Change: And point solutions alone are not sufficient.

Wendy K. Thomas: Organizations often have operational control gaps or technology gaps where they cannot apply or deploy an EDR, leaving them vulnerable if they do not have an NDR in place. Tejas NDR simplifies security management by eliminating the burden of device management through a fully managed cloud offering with on-premise protection, saving customers time and resources that can be deployed elsewhere. And Tejas's AI engine uncovers hidden threats with AI-powered behavior detection, and NDR goes beyond detection to prevention, automatically blocking threats in real time, blocking nearly 1 million threats per month and preventing 99% of malicious activity identified across all network traffic.

Speaker Change: Organizations, often have operational control gaps or technology gaps, where they cannot apply or deploy in edr, leaving them vulnerable. If they do not have an N D are in place.

Tejas N D are simplifying security management by eliminating the burden of device management through a fully managed cloud offering with on premise protection saving customers time and resources that can be deployed elsewhere.

Speaker Change: And pages as AI engine uncovers hidden threats with AI powered behavior detection and N D. R goes beyond detection to prevention automatically blocking threats in real time.

Speaker Change: Walking nearly 1 million threats per month, and preventing 99% of malicious activity identified across all network traffic.

Wendy K. Thomas: The second product advancement that I'll highlight from the first quarter is squarely aimed at solving one of the most entrenched pain points in cybersecurity, protecting against software vulnerabilities. As our Counter Threat Unit's recent State of the Threat report documented, software vulnerabilities remain one of the largest risk factors for organizations, representing a third of initial access by threat actors in successful breaches. Organizations are faced with an overwhelming and growing number of software vulnerabilities to be mitigated, taxing both security and IT resources in the process. With Tejas VDR and prioritization, we offer the first security platform that integrates and unifies the two worlds. Vulnerabilities in Threat Detection, Investigation, and Response with Integus XDR

Speaker Change: The second product advancement that I'll highlight from first quarter is squarely aimed at solving one of the most entrenched pain points and cyber security protecting against software vulnerabilities.

Speaker Change: As our counter threat units recent state of the threat report documented software vulnerabilities remain one of the largest risk factors for organizations.

Speaker Change: Representing a third of initial access by threat actors and successful breaches organizations are faced with an overwhelming and growing number of software vulnerabilities to be mitigated taxing both security and I T resources in the process with Tejas Mediatek and prioritization.

Speaker Change: We offer the first security platform that integrates and unifies two world vulnerabilities.

Speaker Change: Vulnerabilities with threat detection investigation and response within Tejas X D R.

Wendy K. Thomas: Ingesting vulnerabilities from both our native vulnerability scanner and third-party vulnerability products, we streamline investigation and remediation workloads. The platform offers tailored vulnerability prioritization based on each organization's unique threat landscape and operational context. This personalized approach ensures that security efforts are focused on the most pressing threats, improving overall risk management and resource allocation. Furthermore, with C-suite and board attention, more attention is focused on cyber risk than ever. Tejas VDR provides an overall health score that helps executives understand their organization's security posture and prioritize the best way to improve it.

Speaker Change: Ingesting vulnerabilities from both our NATO vulnerability scanner and third party vulnerability products.

Speaker Change: Remind investigation and remediation workloads.

Speaker Change: The platform offers tailored vulnerability prioritization.

Speaker Change: Just on each organization unique threat landscape and operational context.

Speaker Change: This personalized approach ensures that security efforts are focused on the most pressing threats, improving overall risk management and resource allocation.

Speaker Change: Furthermore, with C suite and board attention more focused on cyber risks and ever.

Speaker Change: Tejas media arm provides an overall health score that helps executives understand their organization's security posture and prioritize the best way to improve it.

Wendy K. Thomas: This contextual information supports informed decision-making and strategic planning, empowering leaders to drive and demonstrate continuous improvement in their security programs. A great example of customer success with VDR this quarter was a utility company dealing with ongoing resource constraints in prioritizing and remediating the high-risk vulnerabilities in their environment.

Speaker Change: This contextual information supports informed decision, making and strategic planning empowering leaders to drive and demonstrate continuous improvement in their security programs.

Speaker Change: A great example of customer success with V. D. R. This quarter wasn't a utility company dealing with ongoing resource constraints and prioritizing and Remediated the high risk vulnerabilities in their environment.

Wendy K. Thomas: KHS-VDR's risk-centric prioritization engine has drastically improved their timely remediation of high-risk IT vulnerability backlogs. Our dashboards also solve their need to provide meaningful visibility into their risk posture to their senior leadership and stakeholders. Bringing together the combination of our vulnerability and alert prioritization engines, each differentiated in their respective markets, integrated with the real-time threat observability of our XDR platform, we are redefining integrated vulnerability management programs to provide for unmatched security operations. Moving on, to an update on our go-to-market strategy.

Speaker Change: Tejas V D R's risk centric prioritization engine has drastically improved their timely remediation of high risk I T vulnerability backlogs.

Speaker Change: Our dashboard also solve their need to provide meaningful visibility into their risk posture to their senior leadership and stakeholders.

Bringing together the combination of our vulnerability and alert prioritization engines, each differentiated in their respective markets integrated with the real time threat observe ability our xdr platform.

Speaker Change: We are redefining integrated vulnerability management programs to provide unmatched security operations.

Speaker Change: Moving to an update on our go to market.

Wendy K. Thomas: This quarter, we continue to expand our partner ecosystem across tech alliances, solution providers, managed services providers, and cyber insurance partners, with leading providers in each category. For example, we recently announced a managed security services provider partnership with SoftBank, one of the largest multinationals in Asia Pacific. SoftBank joins more than 50 MSSPs in our partner ecosystem, providing further validation of Tejas' ability to drive scale for large MSSPs with global footprints. Building on our decade-plus market presence and leadership position in Japan, we've seen early traction with this partnership, with the onboarding of new customers well into the double digits since deploying Cajun.

Speaker Change: This quarter, we continued to expand our partner ecosystem across tech alliances solution providers managed services providers and cyber insurance partners with leading providers in each category.

Speaker Change: For example, we recently announced a managed security services provider partnership with Softbank, one of the largest multinationals in Asia Pacific.

Speaker Change: Softbank joins more than 50 MSS piece in our partner ecosystem, providing further validation of <unk> ability to drive scale for large MSS piece with global footprints.

Speaker Change: Building on our decade, plus market presence and leadership position in Japan, we've seen early traction with this partnership with the Onboarding of new customers well into the double digits since deploying pages.

Wendy K. Thomas: We also launched new capabilities for our partners to customize and further scale their MDR offerings. Partners can write and port their own custom detectors, supported by their proprietary threat intelligence editions, enabling them to show unique differentiation for their customers. We also delivered capabilities to support their operating efficiency with enhancements to securing diverse technology stacks with a federated multi-tenant approach, enabling our partners to manage thousands of customers at scale while segmenting access seamlessly.

Speaker Change: We also launched new capabilities for our partners to customize and further scaled our M D. Our offerings.

Speaker Change: Partners can write import their own custom detectors supported with their proprietary threat intelligence additions.

Speaker Change: Enabling them to show unique differentiation for their customers.

Speaker Change: We also delivered capabilities to support their operating efficiency with enhancements to securing diverse technology stacks with a federated multi tenant approach, enabling our partners to manage thousands of customers at scale, while segmenting access seamlessly.

Wendy K. Thomas: As a growing number of end customers look to consolidate vendors, our platform approach to supporting a wide range of third-party controls makes us the vendor of choice for MDR providers to expand their addressable market, and our investments to offer native security controls and capabilities in CAGES from SOAR and EDR to NDR and VDR mean partners have a path to meet customer desires for consolidation while enabling our partners to grow more profitably. A good example of vendor consolidation comes from a partner deal to replace a legacy SIEM at a large property developer in EMEA looking to consolidate Endpoint and other vendors feeding and managing their SIEM.

Speaker Change: As a growing number of end customers look to consolidate vendors our platform approach to supporting a wide remit of third party controls.

Speaker Change: It makes us the vendor of choice for MTR providers to expand their addressable market.

Our investments to offer native security controls and capabilities in changes from Soren Edr to N D. I N V D R.

It means partners have a path to meet customer desires for consolidation, while enabling our partners to grow more profitably.

Speaker Change: A good example of vendor consolidation comes from our partner deal to replace a legacy Sim on a large property developer in EMEA looking to consolidate endpoint and other vendors feeding in managing their system.

Wendy K. Thomas: This customer was looking to address alert fatigue from a stream of false positives, consolidate prevention capabilities, and automate investigation and response actions holistically across their diverse and multi-cloud technology stack. Our ability to go live quickly with their existing stack while providing the path to consolidation as various contracts came up for renewal met the desire from their executives for a fast path to risk reduction while also reducing vendor sprawl. On the cyber insurance partnership front, we also entered into an incident response partnership with Tokyo Marine and Nishito Fire Insurance Company, a market-leading insurance company in Japan.

Speaker Change: This customer was looking to address alert fatigue from a stream of false positives consolidate prevention capabilities and automate investigation and response actions holistically across their diverse and multi cloud technology stack.

Speaker Change: Our ability to go live quickly with their existing stock, while providing the path to consolidation of various contracts came up for renewal.

Speaker Change: The desire from their executives for a fast path to risk reduction, while also reducing vendor sprawl.

Speaker Change: On the cyber insurance partnership front. We also entered into an incident response partnership with Tokio Marine and issued a fire insurance company a market leading insurance company in Japan.

Wendy K. Thomas: Cyber risk partners come to SecureWorks to not only respond to incidents but also to reduce breach exposure for their customers by leveraging our portfolio of solutions. The power and peril of AI continue to be top of mind for customers. AI has always been core to the design of CAGIS and our security solutions. It's fundamental to outpacing the adversary and, combined with automation, underpins the expanding scalability of our business. Some examples of CAGIS's leverage of AI and its various forms apply to several areas.

Speaker Change: Cyber risk partners come to secure works to not only respond to incidents, but also to reduce breach exposure for their customers by leveraging our portfolio of solutions.

Speaker Change: The power and parallel with AI continues to be top of mind for customers.

Speaker Change: AI has always been core to the design of tedious and our security solutions are fundamental to outpacing the adversary.

Speaker Change: And combined with automation underpins, the expanding scalability of our business.

Speaker Change: Some examples of Tejas is leverage of AI in its various forms apply to several areas.

Wendy K. Thomas: First, security analysis efficiency and efficacy, through continuous iteration and feedback from our expert analysts. We achieved significant reductions in false positives, leading to a more efficient and effective security operation. Game-changing capabilities, like automated investigations, provide near-instantaneous summaries of complex threat actor behavior, enhancing analyst accuracy and productivity by seamlessly integrating AI and automation into their investigation and response workflow. Second, superior detection.

Speaker Change: First security analysis efficiency and efficacy.

Speaker Change: Through continuous iteration and feedback from our expert analysts we achieved significant reductions in false positives, leading to a more efficient and effective security operation.

Speaker Change: Game changing capabilities like automated investigations provide near instantaneous summaries of complex threat actor behavior.

Speaker Change: Enhancing analyst accuracy and productivity by seamlessly integrating AI and automation into their investigation and response workflow.

Speaker Change: Second superior detection.

Wendy K. Thomas: Our security flywheel starts with cutting-edge threat and detection research and thousands of IR engagements each year, which are fed into Tejas via Threat Intelligence, Watchlist, and TacticGraph. When coupled with expertise from our data scientists and engineers to build our proprietary advanced detectors, CAGIS operates at a high signal-to-noise ratio to find things that the competition cannot. Our alerts are fed into our SecOps pipeline and constantly curated, enabling our machine learning algorithms to predict and scale what our analysts are focusing on. With machine-readable threat intelligence updating our detectors every hour, CAGES powers superior detection with unmatched speed. Lastly, faster response time.

Speaker Change: Our security flywheel starts with cutting edge threat and detection research and thousands of IR engagements each year, which are fed into tejas via threat intelligence watch lists and tactics grass.

Speaker Change: When coupled with expertise from our data scientists and engineers to build our proprietary advanced detectors cages operates at a high signal to noise ratio to find things that the competition cannot.

Our alerts are fed into our <unk> pipeline and constantly curated enabling our machine learning algorithms to predict and scale, what our analysts are focusing on.

Speaker Change: With machine readable threat intelligence updating our detectors every hour changes powers superior detection with unmatched speed.

Wendy K. Thomas: We leverage large language models to explain detection logic, complex command lines, and esoteric third-party alerts, as well as draft key findings for investigations and automate response actions, accelerating investigation time and reducing time to respond. From detection and triage to investigation and response, AI empowers us to enhance detection capabilities, streamline operations, and ultimately, better protect our customers. This quarter, our innovations in AI to deliver meaningful return on investment for our customers and partners were recognized by receiving the CIO 100 Award for Integrated AI for Better Security Operations.

Speaker Change: Lastly, faster response time.

Speaker Change: We leveraged large language models to explain detection logic complex command wines and esoteric third party alerts as well as drive key findings for investigations and automated response actions.

Speaker Change: Celebrating investigation time, and reducing time to respond.

From detection and triage to investigation and response.

Speaker Change: Empowers us to enhanced detection capabilities streamline operations and ultimately better protect our customers.

Speaker Change: This quarter, our innovations and AI to deliver meaningful return on investment for our customers and partners was recognized by receiving the CIO 100 award for integrated AI for better security operations.

Speaker Change: Yeah.

Wendy K. Thomas: In conclusion, demand for our contagious platform and offerings remains strong. We are fulfilling the promise that is the foundation for CAGES by adding features and capabilities to protect against the initial access vectors, including vulnerability, identity, and email compromise.

Speaker Change: In conclusion demand for our Tejas platform and offerings remained strong.

Speaker Change: We are fulfilling the promise that is the foundation for Tejas by adding features and capabilities to protect against the initial access vectors, including vulnerability identity and email compromise.

Wendy K. Thomas: Providing organizations with holistic coverage and a multi-layered cybersecurity strategy to outpace and outmaneuver the adversary, and using AI and machine learning to drive automation and efficiency through every aspect of the platform. We have and will continue to deliver innovations to meet the security needs most valued by our customers and partners. We remain confident that our unique, open-without-compromise approach has opened the door to continue expanding our successful partnership ecosystem. CAGIS is the platform of choice for organizations in an environment where vendor consolidation and scaling spend on both security technology and talent are key.

Speaker Change: Providing organizations with holistic coverage and a multi layered cyber security strategy to outpace and outmaneuver the adversary.

Speaker Change: And using AI and machine learning to drive automation and efficiency through every aspect of the platform.

Speaker Change: We have and will continue to deliver innovations to meet the security needs most valued by our customers and partners.

Speaker Change: We remain confident that our unique open without compromise approach has opened the door to continue expanding our successful partnership ecosystem.

Tejas: Tejas its a platform of choice for organizations in an environment, where vendor consolidation and scaling spend on both security technology and talent is key.

Wendy K. Thomas: Simultaneously, helping organizations deliver an improved security risk posture and outcomes. This underpins our growth strategy now and in the future. Thank you for investing in our mission to secure human progress, with Tejas defining the future of threat detection and response, driving long-term sustainable growth and value creation. And thank you to our customers and partners for joining forces with us. With that, I'd like to hand the call over to Alpana to discuss our financial results and guidance.

Tejas: Simultaneously, helping organizations deliver an improved security risk posture and outcomes.

Tejas: This underpins our growth strategy now and in the future.

Tejas: Thank you for investing in our mission to secure human progress with Tejas defining the future of threat detection and response driving long term sustainable growth and value creation.

Tejas: And thank you to our customers and partners for joining forces with us.

Speaker Change: With that I'd like to hand, the call over to our panel to cover our financial results and guidance.

Alpana Wegner: Thanks, Wendy. Good morning, everyone.

Speaker Change: Thanks, Wendy good morning, everyone.

Alpana Wegner: I will review our Q1 results before I provide expectations for Q2 and FY25. We once again hit our financial commitments in Q1. We delivered total revenue of $86 million, above our guidance range of $83 million to $85 million, primarily due to professional services. Total revenue continues to be impacted by the wind down of our non-strategic legacy business, which represented 15 points of the 9% decline year over year. Tejas subscription revenue was $69 million, up 10% year-over-year.

Wendy K. Thomas: I'll review, our Q1 results before I provide expectations for Q2 and fiscal year 'twenty five.

We once again hit our financial commitments in Q1, we delivered total revenue of $86 million above our guidance range of 83 million to $85 million, primarily due to professional services revenue.

Wendy K. Thomas: Revenue continues to be impacted by the wind down of our non strategic legacy business, which represented 15 points of the 9% decline year over year.

Wendy K. Thomas: <unk> subscription revenue was 69 million up 10% year over year pages are our increased 7% year over year to 287 million, which was in line with our expectations. We ended the quarter with 2000 pages customers and our average revenue per cases customer was 100.

Alpana Wegner: Tejas ARR increased 7% year-over-year to $287 million, which was in line with our expectations. We ended the quarter with 2,000 Tejas customers, and our average revenue per Tejas customer was $145,000. On a year-over-year basis, Tejas ARPC was up 10% in Q1 and remains a premium to the industry average, underscoring the value that Tejas provides our customers. As our CAGES pricing is largely on a per endpoint basis, growth in endpoints is another indicator of platform expansion.

Wendy K. Thomas: 45000.

Wendy K. Thomas: On a year over year basis pages, a RPC was up 10% in <unk>.

Wendy K. Thomas: Q1, and remains a premium to the industry average underscoring the value that pages provides our customers.

Alpana Wegner: Our endpoint count grew 11% year over year in the first quarter. Our Q1 operating results were strong, reflecting our continued focus on operational efficiencies, productivity improvements, and cost distribution. Q1 non-captageous subscription gross margin expanded 120 basis points sequentially to 74.3% and showed an improvement of 430 basis points versus the first quarter a year ago, driven by automation, continued cloud architecture scaling, and by leveraging our AI and machine learning capabilities. Total gross margin expanded by 1,000 basis points to approximately 70% in the quarter.

As our Tejas pricing is largely on a per endpoint basis growth in endpoints as another indicator of platform expansion and might count grew 11% year over year in the first quarter.

Wendy K. Thomas: Our Q1 operating results were strong, reflecting our continued focus on operational efficiencies and productivity improvements and cost discipline.

Wendy K. Thomas: Q1, non-GAAP cases subscription gross margin expanded 120 basis points sequentially to 74, 3% and showed an improvement of 430 basis points versus first quarter, a year ago, driven by automation continued cloud architecture scaling and by leveraging our AI and machine.

Wendy K. Thomas: Seen learning capabilities.

Wendy K. Thomas: Total gross margin expanded by 1000 basis points to approximately 70% in the quarter. Adjusted EBITDA was 6 million exceeding our guidance of breakeven to 2 million and an improvement of $26 million from Q1 of the prior year.

Alpana Wegner: Adjusted EBITDA was $6 million, exceeding our guidance of break-even to $2 million and an improvement of 26 million from Q1 of the prior year. The Q1 outperformance was driven by the revenue performance I just discussed, acceleration of the elimination of a portion of our redundant costs, and the push in timing of certain discretionary spend to later in the year. Gap's net loss was $36 million for the first quarter, or $0.41 per share, compared with a net loss of $31 million or $0.36 per share in the same period last year.

Wendy K. Thomas: The Q1 outperformance was driven by the revenue performance I just discussed acceleration of the elimination of a portion of our redundant costs.

Wendy K. Thomas: And the push and timing of certain discretionary spend to later in the year.

Wendy K. Thomas: GAAP net loss was 36 million for the first quarter or <unk> 41 per share compared with GAAP net loss of 31 million or <unk> 36 per share in the same period last year.

Alpana Wegner: Gap net loss reflects $26 million in non-cash tax expense for valuation allowance recorded as a result of our tax deconsolidation from Dell Technologies effective in Q1 of this year. Non-GAAP net income was $4 million, or $0.05 per share, compared with a non-GAAP net loss of $17 million, or $0.20 per share, in the same period last year.

Wendy K. Thomas: GAAP net loss reflects 26 million in noncash tax expense for valuation allowance recorded as a result of our tax deconsolidation from Dell technologies effective in Q1 of this year.

Speaker Change: non-GAAP net income was 4 million or five cents per share compared with non-GAAP net loss of $17 million or <unk> 20 per share in the same period last year.

Alpana Wegner: Turning to the balance sheet and capital allocation, we ended Q1 with a strong balance sheet with $47 million in cash, no debt, and an undrawn $50 million credit facility. We used $13 million of cash from operations compared with 41 million used in the prior year period. The decreased use of our operating cash is driven by our focus on cost discipline, reduction in duplicative costs, and increase in operational efficiencies.

Speaker Change: Turning to the balance sheet and capital allocation. We ended Q1 with a strong balance sheet with $47 million in cash no debt and an undrawn $50 million credit facility.

Speaker Change: We used $13 million of cash from operations compared with 41 million used in the prior year period.

Speaker Change: The decreased use of our operating cash is driven by our focus on cost discipline reduction in duplicative costs and increase operational efficiencies as a reminder, our cash flow can fluctuate from quarter to quarter and first quarter is seasonally the highest use of cash primarily due to annual incentive payout and the timing of echo.

Alpana Wegner: As a reminder, our cash flow can fluctuate from quarter to quarter, and the first quarter is seasonally the highest use of cash, primarily due to annual incentive payouts and the timing of equity compensation related tax. Now turning to our second quarter and full year 25 guide. For Q2 fiscal year 25, we expect total revenue of $80 to $82 million, and adjusted EBITDA to be between $1 and $3 million. Our outlook for Q2 EBITDA reflects the timing difference in completing the revenue wind-down of other MSS in Q1 and the remaining redundant costs, which will be eliminated in the second half of fiscal year 25, as well as our expectation for lower non-strategic professional services.

Speaker Change: Compensation related taxes.

Speaker Change: Now turning to our second quarter and full year 25 guidance.

Speaker Change: For Q2 fiscal year 'twenty five we expect total revenue of 80 to 82 million.

Speaker Change: That EBITDA to be between one and $3 million our outlook for Q2 EBITDA reflects the timing difference in completing the revenue wind down of other MSS in Q1, and the remaining redundant costs, which will be eliminated in the second half of fiscal year 'twenty five as well as our expectation for lower non strategic.

Speaker Change: Professional services.

Speaker Change: And we expect non-GAAP EPS to be breakeven to two sets.

Alpana Wegner: And we expect non-GAAP EPS to be breakeven for two sets. For the full year fiscal 25, we now expect total ARR to be $300 million or greater, total revenue of $325 to $335 million, total gross margins to be 68%, inclusive of Tejas gross margin of 74%, adjusted EBITDA to be between $6 and $12 million, non-GAAP EPS to be between $0.03 and $0.09, and cash flow from operations to be between cash used of $2 million and cash used of $2 million.

Speaker Change: For the full year fiscal 'twenty five we now expect total <unk> to be 300 million or greater total revenue of 325 to 335 million.

Speaker Change: <unk> gross margins to be 68% inclusive of Tejas gross margin to be 74% adjusted EBITDA to be between six and $12 million.

Speaker Change: non-GAAP EPS to be between three and nine cash flow from operations to be between cash use of $2 million in cash generated of $8 million and we expect capex to be in line with fiscal year 'twenty four.

Alpana Wegner: generated $8 million, and we expect CapEx to be in line with fiscal year 24. In closing, our Q1 results give us confidence in our ability to meet our 2025 outlook. We will continue to invest in our growth strategy through opportunistic investment in sales and marketing to accelerate traction with partners and investments in product development on new and innovative capabilities, both add-on and native security products, to deliver additional value to our customers and partners while remaining committed to EBITDA profitability as we continue to drive scale in our business. Thank you for joining us on the call today. Wendy will now rejoin us as we begin the Q&A. Operator, can you please introduce the first question?

Speaker Change: In closing our Q1 results give us confidence in our ability to meet our 2025 outlook.

Speaker Change: We will continue to invest in our growth strategy through opportunistic investment in sales and marketing to accelerate traction with partners.

Speaker Change: And investments in product development on new and innovative capabilities, both add on and native security products to deliver additional value to our customers and partners, while remaining committed to EBITDA profitability as we continue to drive scale in our business.

Speaker Change: Thank you for joining us on the call today, Wendy will now rejoin us as we begin Q&A operator can you. Please introduce the first question.

Operator: Thank you. As a reminder, if you would like to ask a question today, please do so now by pressing star followed by the number one on your telephone keypad. We will now take our first question, which comes from the line of Saket Kalia on Barclays. Please go ahead; your line is now open.

Speaker Change: As a reminder, if you'd like to ask a question today. Please do so now by pressing star followed by the number one on your telephone keypad. We will now take our first question, which comes from the line of Buckhead Calia with Barclays. Please.

Speaker Change: Please go ahead. Your line is now open.

Saket Kalia: Okay, great. Hey, Wendy. Hey, Alpana. Thanks for taking my questions here.

Speaker Change: Okay great.

Speaker Change: Hey, Thanks for taking my questions here.

Operator: Morning, Wendy, maybe. Hey there. Good morning, Wendy. I'd like to start with you.

Good morning.

Speaker Change: One thing, maybe hey, there good morning.

Speaker Change: Maybe to start with you.

Wendy K. Thomas: You know, as you know, there's been some consolidation in the SEM market. And I found some of your customer examples in the prepared remarks really interesting just around SAM. So the question maybe is, what are you hearing from customers about how they're thinking about their SIMs right now, given some of these changes? And how do you think Tejas could benefit in that backdrop?

As you know theres been some consolidation in the Sim market recently and I found some of your customer examples in the prepared remarks really interesting just around Sam. So the question maybe is what are you hearing from customers.

Speaker Change: How they're thinking about their sims right now given some of these changes.

Speaker Change: How do you think you just could benefit in that backdrop.

Wendy K. Thomas: Thanks, Saket. So we've been talking about this consolidation for some time, but it really has now begun in earnest, and you certainly see that in some of the legacy players looking to consolidate. But in terms of customers, what we see as the opportunity is not just the SIM replacement. But as an XDR platform with both native controls and capabilities across EDR, NDR, VDR, orchestration, and threat intelligence, it means that there is a broader consolidation play going on in the marketplace that we can take advantage of. It's more than SIMs or even legacy NDRs.

Speaker Change: Sure. Thanks bucket. So we've been talking about this consolidation for some time, but it really has now begun in earnest.

Speaker Change: You certainly see that in some of the legacy players looking to consolidate.

Speaker Change: Consolidate.

Speaker Change: But in terms of customers, what we see as the opportunity is not just a similar replacement.

Speaker Change: As a as an xdr platform with both native controls and capabilities across E. D. R and D V D. Our orchestration had intelligence. It means that there is a broader consolidation play going on in the marketplace that we can take advantage of its more than Sam's or even legacy M. D R's.

Speaker Change: If some of these point products.

Speaker Change: Products that really are features or capabilities of an integrated platform.

Wendy K. Thomas: It's some of these point products that really are features or capabilities of an integrated platform. And so when you think about our ability to serve as sort of that control hub for both our own native controls or a mixed tech stack for a set of control environments, you not only provide the most optionality for customers to reduce vendors, but you get better total cost of ownership with SecureWorks. But given our experience, which we've just completed, of resolving our MSSP customers, we are uniquely positioned to provide customers with the playbook and, frankly, the reference to customers that demonstrates our ability to mitigate their risk and streamline the process of them transitioning controls and or replacing their SIEM without missing a beat.

Speaker Change: So when you think about our.

Speaker Change: Our ability to service that control hub for them.

Speaker Change: Both our own native controls or a mixed bag with a set of control environments.

Speaker Change: Not only provide the most optionality for customers to reduce vendors get better total cost of ownership with secure works.

Speaker Change: But given our experience with them.

Speaker Change: Completed a repositioning.

Speaker Change: Our MSP customers.

Speaker Change: We are uniquely positioned to provide customers with the playbook and frankly, the reference customers that demonstrates our ability to mitigate that risk and streamlines the process of them transitioning control indoor replacing their Sim without missing a beat and that's why we've seen not only our customers come.

Wendy K. Thomas: And that's why we've seen not only our customers come to us to replace their SIEM, but MSSPs that we've signed as well, because they see the opportunity not just for better security outcomes for their customers but better margins for their business, and we don't have to buy those customers.

Speaker Change: Come to us to replace their so their sim, but.

But and that's the piece that we've signed as well because they see the opportunity not just for better security outcomes for their customers, but better margins for that business and we don't have to buy those customers in the past.

Saket Kalia: Got it, got it. That's actually super interesting. Alpana, maybe, maybe for you for my follow up.

Speaker Change: Got it got it that's that's such a super interesting.

Speaker Change: Maybe maybe for you for my follow up.

Alpana Wegner: I believe the ARR from the other MSS business here is really de minimis at this point, but maybe curious, where are we sort of in the arc of subscription revenue? And where does that sort of bottom before we start to see sequential growth? I mean, clearly that transition has happened on ARR, but revenue, of course, always lags that. Where are we sort of in that arc, if that makes sense?

Speaker Change: Hum.

Speaker Change: Believe me there are from from other MSS business here is really de Minimis.

Speaker Change: At this point, but but maybe curious where are we sort of in the arc of subscription revenue.

Speaker Change: And where does that sort of bottom.

Speaker Change: Before we start to see sequential growth I mean, clearly that that transition has happened on air are revenue of course always lags that where are we sort of in that arc if that makes sense.

Alpana Wegner: Yeah, thanks for the question and good morning again. So you're right in that with the completion of the end of life at the end of this quarter, Q1, we have a very de minimis amount of remaining ARR. So effectively, we're 100% at this point in terms of pages ARR. So as we look ahead, just on the subscription line alone, I would say that, you know, we feel good about the second half of this year can see that sequential growth start to come through.

Speaker Change: Yeah. Thanks for the question and good morning, again, so you're right in that with the completion of the end of life in it.

Speaker Change: The end of this quarter Q1, we we have a very de minimis amount of remaining <unk>. So effectively we're 100% at this point to to say R. R.

Speaker Change: So we look ahead just on the subscription line alone I would say that.

Speaker Change: We feel good about the second half of this year being that sequential growth.

Speaker Change: Art to come through them as we mentioned in our commentary we continue to see good performance on the pages and with that being the full concentration of our book from a subscription standpoint.

Alpana Wegner: As we mentioned in our commentary, you know, we continue to see good performance on the pages. And with that being the full concentration of our book from a subscription standpoint, that's what's giving us the confidence to look at the second half of the year and expect that sequential growth to come through.

Speaker Change: Giving us the confidence as we look at the second half of the year and expecting that sequential growth.

Speaker Change: To come through.

Saket Kalia: Got it. Makes sense. I'll hop back in queue. Thanks, guys.

Speaker Change: Got it makes sense I'll hop back in queue. Thanks, guys.

Speaker Change: Thank you. Thank you.

Speaker Change: Okay.

Operator: Our next question comes from Mike Cikos with Needham. Please go ahead; your line is now open.

Speaker Change: Our next question comes from Mike <unk> with Needham. Please go ahead. Your line is now open.

Matt Coletreon: Hey, good morning team. This is Matt Coletreon from Mike Cikos over in Needham. Thanks for taking our questions. I was wondering, can you tell us about your assumptions for the slope of net new ARR in the back half of the year, now that the drawdown of other MSS is complete?

Speaker Change: Hey, good morning, Tien isn't macaroni triage for Mic see crossover at Needham Thanks for taking our question.

Speaker Change: I was wondering.

Speaker Change: What can you tell us about your assumptions for the slope of that new AAR or the back half of the year now that the draw down of other MSS is complete.

Wendy K. Thomas: Yeah, good morning. Thanks for the question. And this is Alpana.

Speaker Change: Yeah. Good morning, Thanks for the question.

Speaker Change: And this is a piano I'll, maybe start and then Wendy can add in if there's something there that I met.

Alpana Wegner: I'll maybe start and then Wendy can add in if there's something there that I missed. I would say that, you know, when we guided them at the beginning of the year, we had taken into consideration several factors. Those factors haven't really performed any differently as we look at the performance from Q1 and as we look ahead. And so we would continue to expect, as we discussed in our last call when we set that guidance, we continue to expect similar sequential performance on the ARR line.

Speaker Change: I would say that.

Speaker Change: We were.

When we guided at the beginning of the year, we would take.

Speaker Change: Consideration several factors those factors haven't really.

Speaker Change: Formed any differently as we look at that.

Speaker Change: Performance from Q1, and as we look ahead and so we would continue to expect to see.

Speaker Change: As we've discussed.

Speaker Change: Our last call when we set that guidance.

We continue to expect to see.

Speaker Change: Similar.

Speaker Change: Joel on performance on the E R line.

Alpana Wegner: And again, those primary factors that shaped that thinking were really the macro environment and what we're seeing from buying behaviors. Q1 didn't veer from that. We've kind of seen a steady state, and we continue to see good demand. The cybersecurity spend prioritization is still there. And we do think from a macro perspective, as we see the market gaining some resiliency, we expect that to continue to improve. And really, you know, our view is we're kind of in a steady state right now as we're progressing through the year, just being somewhat measured on how we think about that arc you're asking about.

Speaker Change: And again the primary factors that shaped that thinking was really that the macro environment and what we're seeing from buying behaviors Q1 it didn't.

Speaker Change: It didnt that Didnt veer from that we've kind of seen steady state and and we continue to see good demand that the cyber security spend prioritization, it's still there and we do think as from a macro perspective as we see some.

Speaker Change: Gaining some resiliency, we expect that to continue to improve and and really.

Speaker Change: Our view is where we're kind of in a steady state right now as we're progressing through the year I'm just being.

Speaker Change: Somewhat measured on how we think about.

Speaker Change: That that arc is you're asking about.

Speaker Change: Okay very helpful. And then last quarter, you called out deals both being pulled forward and closing earlier in the quarter was there anything to call out this quarter in terms of pull forward or linearity.

Alpana Wegner: Very helpful. And then last quarter you called out deals both being pulled forward and closing earlier in the quarter. Was there anything to call out this quarter in terms of pull forward or linearity and any comments on what was driving that and expectations for the rest of the year?

Speaker Change: Any comments on what was driving that and expectations for the rest of the year.

Wendy K. Thomas: Thanks, we did talk about that in the fourth quarter. We did not see anything of that nature kind of pull forward or.

Speaker Change: Thanks.

Speaker Change: We did talk about that in fourth quarter, we did not see anything of that nature kind of pull forward or.

Wendy K. Thomas: Acceleration, which you often see kind of at the year-end and fourth quarter seasonality-wise. We tend to have to see really strong fourth quarters and more moderate first quarters. People are sort of getting their budgets under their belts and that kind of thing. So, so nothing of that nature this quarter that we would call out as a caution against the second quarter. Okay, great. Thanks so much.

Acceleration, which you often see kind of at the yearend and fourth quarter seasonality wise.

Speaker Change: To see really strong fourth quarters.

Speaker Change: More moderate first quarters as people are sort of getting their budgets under their belts and that kind of thing. So nothing of that nature. This quarter that we would call out as a caution again.

Speaker Change: Sure.

Speaker Change: Okay, great. Thanks, so much.

Operator: The next question comes from Hamza Fodderwala of Morgan Stanley. Please go ahead; your line is now open.

Speaker Change: The next question comes from Hamzah <unk> with Morgan Stanley. Please go ahead. Your line is now a pen.

Hamza Fodderwala: Hey, good morning. Thank you for taking my question and for a nice revenue beat in a difficult demand environment. Alpana, I'll just keep it to one question for you.

Speaker Change: Hey, good morning, Thank you for taking my question.

Speaker Change: And then a nice revenue beat.

Speaker Change: In a difficult demand environment.

Alpana Wegner: I'm curious how you feel about the capital position, the financial condition of the company. You spoke about having a good amount of cash on the balance sheet. Obviously, revenue is still declining, but that decline seems to be moderating.

Speaker Change: I'll just keep it to one question for you just I'm curious how you're feeling about.

Speaker Change: Yes.

Speaker Change: Capital position the financial condition of the company.

Speaker Change: You spoke about.

Speaker Change: Sort of a good amount of cash on the balance sheet, obviously the revenue is.

Speaker Change: It's still in decline, but I think that that.

Speaker Change: Declines seem to be moderating, but I'm curious how you feel about.

Speaker Change: And the positioning of the company.

Speaker Change: Talk to you going forward. Thank you.

Alpana Wegner: Yeah, good morning, and thanks for the question. As you mentioned, we do feel good from a balance sheet perspective. The cash that we have on the balance sheet certainly puts us in a position to be able to have the appropriate balance sheet from a working capital perspective. And as I mentioned in my prepared remarks, we also believe that the current operating leverage that we have in the business allows us to invest in some key areas from a growth perspective, particularly as we look ahead in the year, both from a marketing and demand and a go-to-market perspective, as well as from a product.

Hamza Fodderwala: But I'm curious how you feel about the position of the company and the health of the company going forward. Thank you. Yeah, good morning. And thanks for the question.

Yeah, Good morning, and thanks for the question as you mentioned, we do feel good from a balance sheet perspective.

Speaker Change: The cash that we have on the balance sheet is certainly puts us in a position to be able to have them be appropriate balance sheet from a working capital perspective, and as I mentioned in my prepared remarks, we also believe that the current.

Speaker Change: <unk> operating leverage that we have in the business allows us to.

Speaker Change: Invest in some key areas from a growth perspective.

Speaker Change: Particularly as we look ahead in the year.

Speaker Change: Hi.

Speaker Change: Our marketing and the demand and in our go to market perspective, as well as from a product.

Alpana Wegner: I think as we look ahead to the year and as we've shared, you know, we see that sequential growth in revenue coming back in the second half of the year, which I think also helps us from a positioning perspective to feel that we've got good stability and sustainability in the business. And we're continuing to see good operating leverage at the gross margin line. And so we really, we feel like we like what we're seeing from how the business is performing in Q2.

Speaker Change: I think as we look ahead to the year and as we've shared we.

Speaker Change: We see that sequential growth in revenue coming back in the second half of the year, which is.

Speaker Change: It.

Speaker Change: Also helps us from a positioning perspective feel that we've got good.

Speaker Change: Stability and sustainability in the business.

And we're continuing to see good operating leverage at the gross margin line.

Speaker Change: And so we really we feel like we like what we're seeing from how the business is performing in Q2 as we've indicated previously we do expect to be a bit about the bottom both from a top line perspective as well as the bottom line.

Alpana Wegner: As we've indicated previously, we do expect to be a bit of a bottom, both from a top line perspective, as well as from a bottom line with some of the redundant costs remaining in Q2, but we see that coming off in the second half. So as I look ahead, you know, the second half has some key milestones ahead for us. And that will just continue to give us a higher degree of confidence in the balance sheet and in the operating leverage that we have. Thank you, and nice job.

Some of the redundant costs.

Speaker Change: Remaining in Q2, but we see that coming off in the second half. So as I look ahead, you know the second half had some key milestones ahead for us and and and that will just continue to give us a higher degree of confidence in the in them in the in the balance sheet and N V.

Speaker Change: The operating leverage that we have.

Speaker Change: Thank you Chuck.

Speaker Change: Thank you. Thank you.

Speaker Change: Okay.

Speaker Change: Yeah.

Operator: At this time, we have no further questions. As a final reminder, if you wish to ask a question today, please press start followed by the number 1 on your telephone keypad now. We have no further questions, so I'm going to call back to the management team for any closing instructions.

Speaker Change: At this time, we have no further questions I have a final reminder, if you wish to ask a question today. Please press star followed by the number one on your telephone keypad now.

Speaker Change: We have no further questions.

Speaker Change: Go back to the management team for any closing comments.

Wendy K. Thomas: Okay, thank you very much. That wraps up the Q&A for today's call. A replay of this webcast will be available on our investor relations page at secureworks.com along with our supplemental web deck and additional financial tables. Thanks again for joining us today.

Speaker Change: Okay. Thank you very much that wraps the Q&A for today's call. A replay of this webcast will be available on our Investor Relations page of secure works Dot com, along with our supplemental for web deck and additional financial tables are thanks.

Speaker Change: Thanks again for joining us today.

Speaker Change: Okay.

Speaker Change: Yeah.

Operator: Thank you everyone for joining us today. This concludes our call, and you may now disconnect your lines.

Speaker Change: Thank you everyone for joining us today. This concludes our call and you may now disconnect your lines.

Speaker Change: Uh huh.

Speaker Change: Sure.