Secureworks Cuts Jobs for a Second Time This Year
As with other parts of the IT industry, layoffs are continuing to hit the cybersecurity field.
Executives with software-as-a-service (SaaS) security company Secureworks this week announced a second around of job cuts this year, laying off 15% of the workforce – about 300 of its workers. The company in a filing this week with the Securities and Exchange Commission (SEC) said it is shifting more of its investments to the “higher value, higher margin” Taegis offering.
Taegis is the company’s cloud-native security platform for detecting and responding to cyberthreats and, according to a letter CEO Wendy Thomas sent to employees August 14 about the planned job cuts, Taegis accounted for 86% of the company’s total annual recurring revenue (ARR) in the company’s fiscal first quarter.
Secureworks officials in the SEC filing said the goal is to optimize its organizational structure “to increase its scalability, and other priorities to better position the Company for continued growth with improving operating margins over time.”
They expect the job cuts will cost the company about $14.2 million, most of which will cover severance and other benefits for the laid-off workers as well as real estate-related expenses.
Secureworks released Taegis in 2021, calling it a cloud-native security analytics platform that delivers extended threat detection and response (XDR) services across clouds, endpoints, and networks by extending the reach of the company’s threat intelligence capabilities. The company pitches Taegis as combining security analytics with human intelligence.
The company also is driving more AI and automation into the SaaS XDR offering.
Taegis is the Growth Engine
Secureworks sees Taegis as a growth driver for the company moving forward. In the FY2024 first quarter, Secureworks saw total revenue drop year-over-year from $121 million last year to $94.4 million. During those same three months, Taegis revenue jumped 68%, to $62.6 million, with ARR increasing 49%, to $269 million. Its gross margin was 70%.
As of early February, the company had about 4,500 customers, 2,000 of which were Taegis customers and another 700 subscribing to Secureworks’ managed security services.
“Our holistic approach, combined with our open XDR strategy, drives better security outcomes for customers, as reflected in the continued strong momentum in Taegis this quarter,” Thomas said in a statement about the quarterly earnings in June. “Our ongoing use of AI and automation helps Taegis achieve the most effective and efficient detection and response for our customers.”
In her letter, Thomas noted that plans for phasing out its Counter Threat Platform (CTP) and other non-strategic services are happening faster than initially projected, enabling Secureworks to end them earlier than planned. This will help the company reach its end-of-year financial goals, she wrote.
“Successful businesses are flexible in the way they deploy resources where they’re needed most, foster innovation, and make real impact,” Thomas wrote. “We are simplifying our team structure with fewer organizational layers – and meaningful process and technology changes – to empower teammates to be bold, challenge the status quo, and make impactful decisions. The changes we’re making and the execution ahead will set our business up for long-term success.”
This is the second round of layoffs for the Atlanta-based company. In February, the vendor cut 9% percent of the workforce – which at the time was pegged at 2,149 employees around the world – and at the time also cited the need to push more resources toward the Taegis platform.
Other Security Companies are Cutting Jobs
Secureworks isn’t the only cybersecurity firm trimming its workforce. Earlier this month, Boston-based Rapid7 – which touts its own cloud-native threat insight platform – said it was slashing its 2,600-plus workforce by 18%, or more than 400 jobs.
In a letter to employees, Rapid7 CEO Corey Thomas said the goal was to realign the business to expand its managed detection and response platform across all of its security operations and to build out its cloud capabilities.
UK-based NCC Group earlier this year cut 7% of its workers and this month said it was laying off a “small number” of employees.
Other cybersecurity firms cutting jobs this year include bug bounty platform HackerOne (12% of workers), SentinelOne (5%), Dragos (9%), and Bishop Fox (13%).
