SecureWorks Corp.

Good morning, and welcome to the SecureWorks fourth quarter and four-year fiscal 2021 financial results conference call. Following prepared remarks, we will conduct the question and answer session. If you have a question, simply press star, then one on your telephone keypad at any time during the presentation. At this time, all participants are in a listen-only mode. We are webcasting this call live on the SecureWorks investor relations website. After the completion of the call, a recording of the call will be made available on the same site. Now I will turn the call over to Paul Parrish, Chief Financial Officer. You may begin.

Thanks, everyone, for joining us. With me today is Mike Cody, our CEO, and Wendy Thomas, our President of Customer Success, who will join us for questions at the end of our prepared remarks. During this call, we will reference non-GAAP financial measures, including non-GAAP revenue, gross margin, operating expenses, operating income, net income, earnings per share, EBITDA, adjusted EBITDA, and cash flow from operations. A reconciliation of these measures to their most directly comparable GAAP measures can be found in our web deck and press release, which are available on our IRR websites. Please also note that all growth percentages refer to year-over-year change unless otherwise specified. 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 STC filings. We assume no obligation to update our forward-looking statements. Now I'll turn it over to Mike.

Thanks, Paul. Our fourth quarter marked a solid end to an unprecedented year. Despite the macro uncertainty, our path remained clear. We leaned into our strategy of becoming the cloud-native security analytics platform of choice and broadened our reach with the partner community to deliver our holistic approach to security at scale. Our security analytics platform, what we are now calling TAGIS, is differentiated by intellectual property developed over more than 20 years. As the managed security services leader, we have deep experience across tens of thousands of environments, allowing us to create detectors and security analytics that work in an integrated way. We also see how threat actors' tactics, techniques, and procedures avoid point product security controls on a daily basis and embed this understanding of the threat landscape and behaviors into our platform. Furthermore, our approach to security is vendor inclusive. We use telemetry from both our sources and third parties to create the most comprehensive, effective security analytics platform. Customers are consistently telling us about the value they are realizing with Tagus, and initial results are promising. Tagus ARR has grown to $55 million, up from approximately $15 million at the beginning of the year, and now accounts for 13% of total ARR. Additionally, we drove robust Tejas customer growth up 390% and increased the average revenue per customer to approximately $140,000. This lifted the total average revenue per customer to the highest in our company history. I thank my teammates who were undeterred by the challenges presented this past year, and I continue to be incredibly proud of the resiliency and adaptability they've shown in protecting our customers every day. They've done a terrific job, but we know in the security business our work is never done. We must continue to defend our customers and get better each day to outpace and outmaneuver an ever-evolving adversary. Cyber threats continue to rise, and cyber crime continues to accelerate, with the explosion of data and devices expanding the vulnerable attack surface from the core to the edge. Recent well-publicized breaches have once again demonstrated the capability of nation states to coordinate and execute a sophisticated attack. In response to this, we've leveraged the visibility of our global threat intelligence to keep all customers informed and apprised of their vulnerability status. Events like these also underscore the importance of our strategic focus. We believe that the ability to outpace the adversary at scale requires an integrated, inclusive analytics platform, one that works with point products from across the industry, allowing the community to come together and defend against the threat. Historically, we delivered our security platform and software applications as an integrated part of our managed security services. With the decoupling of our software, we can now meet the needs of more customers regardless of their security strategy. Our security analytics platform positions us to compete in a total addressable market of $37 billion, growing in the mid-teens, and we are well positioned to capture this market span. I'll take a few minutes now to discuss the three key focus areas outlining why we win, starting with our portfolio. Tagus was built from the ground up by our world-class team of engineers and product developers, using our decades of experience as the foundation. We have imbued the software with best practice investigation and remediation workflows, leaning on our leadership and security operations to understand how to best defend and support our customers. The Tagus brand signals our evolution, offering best-in-class cloud-native software and higher value to our customers. It extends beyond detection to automated investigation response taken in context with each customer's risks and vulnerabilities. And with cloud-native software, we rapidly build, scale, and deploy the additional capabilities our customers seek to secure their organizations in an industry that requires constant innovation. Here are two examples. In early December, we announced improvements in our extended detection and response application, directly addressing customers' needs for a compelling SIEM alternative. With the addition of log retention, reporting, and search capabilities, security operations teams can now detect, investigate, and respond to security incidents with greater visibility. They can also proactively hunt and gain actionable insights on both known and unknown threats. Customers have told us with these additions They have a view to displacing some, if not all, of their legacy SIM spend, and you will see us extend this approach to additional use cases in the future. We also expanded the TAGIS platform with the vulnerability detection and response application, demonstrating our intent to use both organic and inorganic strategies to layer on the additional capabilities our customers need. Additionally, our managed security services, incident response engagements, and proactive research enhance our software capabilities with the latest threat intelligence and workflow improvements. Our counter-threat unit tracks global threat groups, creating an extensive list of countermeasures, rules, and analytics to provide broad visibility and coverage. This allows us to improve our workflow design and automation as the combination of delivering both security services and building software in-house creates a cycle of rapid, continuous improvements. This unique combination of strengths, our deep experience as the global MSSP leader, paired with our software-enabled threat intelligence that is constantly evolving, distinguishes us in the marketplace. Turning to customer success, we are actively working with existing customers to migrate their solutions to TAGIS, while also expanding our customer base with new logos. We ended the year with nearly 400 customers on the platform and are seeing continued success with both new and existing customers realizing the value of our security analytics. Customers see a significant benefit when deploying Tagus XDR. The potential ROI over a three-year period in terms of total economic impact is north of 400% based on a study conducted by Forrester Consulting. Let me give you two examples. A large European steel manufacturer selected Tagus Managed XDR to help streamline the identification and investigation of threats in their environment. By leveraging Tagus, this new customer gained full visibility across their environment with high-fidelity alerts that are automatically enriched with threat intelligence from our CTU research team. And this is a repeatable use case. Our platform allows us to extend our security intelligence and operations expertise to customers of all sizes, no matter the scale of their environment they need to protect. Additionally, an existing regional bank customer was looking for a solution to integrate the visibility and coordination of their disparate security point products. They too turned to Tagis as their central security hub. Given the platform's inclusive approach to data sources and integrated workflows, the customer now has comprehensive visibility and security management through a single pane of glass. Stories like these emphasize the value proposition of our expanded software platform to both customers and our business. Finally, our go-to-market acceleration and expansion. We are investing in our channel strategy and building momentum in the SecureWorks partner community, most recently launching an MSSP track for our partner program. This push into the channel provides two key benefits. First, a robust partner program will help us accelerate Tagus sales. We are growing a broad community of service providers that mutually benefit from the expanded use of our platform at the heart of their security operations. MSSPs get to add our leading software capabilities to their portfolio, while managed service providers who aspire to extend into security services can accelerate their journey by leveraging the Tagus platform and applications our best practices and our training programs. In addition, our MSSP program addresses one of the fundamental challenges in our industry, a lack of security talent. Extending our security expertise to partners creates a larger force of well-trained security experts that benefit from our know-how in defending and securing customers around the globe. Our platform is designed to connect the security community, creating a force for good. By leveraging SecureWorks IP, we transform the way security is done for the benefit of both our and our partners' customers. In closing, I'm pleased with the progress we are making as we strengthen the security community to beat the adversary at scale. There is power in democratizing our security expertise and services leadership. We are using our deep security operations experience, understanding of threat intelligence, and advancements in technology to reimagine how security should be done. As a broader set of customers embrace Tejas, there is a network effect through this connected community. More customers means more visibility, increasing our ability to outmaneuver threat actors through collaboration to better protect all customers. We are making great progress and remain laser focused on three goals. First, innovating and expanding the Tejas platform. Second, ensuring the protection and success of our customers, and finally, accelerating our go-to-market. We recognize this year will be an important one and are committed to providing incremental disclosures on Tagus as the year progresses. I am confident we have the right strategy to help our customers, partners, and teammates while creating long-term value for our investors. I'll now turn it back to Paul.