Secureworks’ Channel Revenue Booms After Launching New XDR Platform

‘We’ve had extreme success in the channel,’ says top executive Chris Bell. ‘We’re really (and) truly doubling down in the channel.’

Chris Bell, vice president of strategy, corporate development and strategic alliances at Secureworks

Secureworks’ channel sales have more than doubled as a result of the Atlanta-based security firm’s decision three years ago to strategically transform itself into a largely SaaS solutions provider company.

Secureworks, majority-owned by Dell Technologies and best known as an MSSP services company, recently reported that annual recurring revenues for its Secureworks Taegis offering – a cloud-native extended detection and response (XDR) platform – had jumped to $201 million in the second quarter, from $101 million during the same period a year ago.

Meanwhile, about 75 percent of Taegis’s new business came via the channel in the second quarter, Chris Bell, vice president of strategy, corporate development and strategic alliances, told CRN in a recent interview. In all, the company said in a filing that it added 800 Taegis customers year-over-year in the second quarter, a 114 percent increase, finishing the second quarter with about 1,500 Taegis customers.

The bottom-line: Channel sales now make up more than 20 percent of Secureworks’ total revenues, up from about 9 percent when Secureworks first decided to market Taegis in 2019, Bell said.

“We’ve had extreme success in the channel,” said Bell. “We’re really (and) truly doubling down in the channel.”

Bell didn’t disclose how many employees are on the company’s channel team. The company had 2,351 full-time employees as of the end of this past January, according to a regulatory filing.

But he did say the resources committed to the channel have quadrupled since 2020, when the channel program was first launched.

The company has focused its channel efforts in four areas, including the building of alliances with tech partners to sell products to customers via the channel.

The company is also focusing on making sure cybersecurity insurers view Secureworks as a preferred vendor whose products reduce cybersecurity risks, Bell said. The company is also focusing its channel efforts on MSSP programs and solution providers.

Though the numbers appear bullish for Taegis and Secureworks’ overall goal of transforming itself into a vendor company, Wall Street doesn’t seem all that impressed. The company offers channel players both Taegis XDR and Taegis Managed XDR.

The company’s stock was trading earlier this week around $10 a share, down from its 52-week high of $26.89 per share.

Earlier this month, the company reported that total revenue, despite the Taegis surge, was off in the second quarter, at $116 million, down from $134 million in the year prior, according to a company press release.

Meanwhile, the firm’s net loss in the second quarter was $24.7 million, up from a $11.8 million loss during the same period last year, according to Secureworks.

The company has also seen some recent changes at its corporate top, including the appointment of a new CTO earlier this summer. That move came roughly a year after it was announced that long-time CEO Michael Cote would be replaced by company veteran Wendy Thomas.

Kevin Gemmell, securities services manager at Newark, N.J.-based New Era Technology, said his company has had a “very successful” partnership with Secureworks over the years – and he thinks its rollout of Taegis has helped the company.

“It’s been really good for us,” he said. “Our customers are jumping all over its platform.”

Customers like the fact Taegis is cloud-native, contains a number of features on one platform, and has a simplified pricing format.

“I think they’ve made the right decision to get away from hardware management,” he said. “I think it’s been a smart move.”