March 27, 2019 / 11:19 AM / 7 months ago

SecureWorks' revenue retention rate falls in 2019, shares plunge

(Reuters) - SecureWorks Corp said on Wednesday its revenue retention rate has dropped in 2019, raising concerns about customer commitment to the cybersecurity firm’s products, sending shares down nearly 10 percent.

The Atlanta-based company, which is owned by Dell Technologies Inc, said 2019 revenue retention was at 89 percent compared to 96 percent in 2018. Excluding the impact of a transition of a “large customer,” 2019 revenue retention was at 93 percent.

“We have a specific executive focus on retention,” said Michael Cote, chief executive officer of the company.

He said SecureWorks has come up new offerings over the past 12 months to cope with changes in the cybersecurity business.

When asked about possible sale of the company from Dell, Cote stressed its partnership with the computer maker without addressing the question.

In February Reuters reported Dell was looking to sell SecureWorks, citing sources familiar with the matter. Dell acquired SecureWorks for $612 million in 2011 and then listed the company in 2016.

In the beginning of the year, Dell, together with SecureWorks and another cybersecurity company CrowdStrike launched the Safeguard and Response solution that provides cybersecurity products to enterprises, especially the mid-market companies with limited infrastructure.

On fourth-quarter earnings, SecureWorks fell short of revenue and forecast current quarter earnings at below Wall Street estimates.

SecureWorks expects current-quarter revenue between $131 million and $133 million, below analysts’ average estimate of $136.7 million, while adjusted loss is expected to be between 5 cents and 6 cents per share, compared with a break-even figure, according to IBES data from Refinitiv.

The company also said its chief financial officer, Wayne Jackson, will step down at the end of Jan.31, 2020.

SecureWorks shares were down 10 percent at $17.86 in early morning trade.

Reporting by Angela Moon in New York and Vibhuti Sharma in Bengaluru; Editing by Bill Trott

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