- Q1 revenue of $211 million increased 6
percent from the first quarter of 2018
- Q1 billings of $182 million increased 4
percent from the first quarter of 20181
- Q1 cash flow generated by operations of
$24 million increased 166 percent from the first quarter of
2018
- Q1 ending annual recurring revenue of
$550 million increased 8 percent compared to the end of the first
quarter of 2018
FireEye, Inc. (NASDAQ: FEYE), the intelligence-led security
company, today announced financial results for the first quarter
ended March 31, 2019.
“We met or exceeded our guidance ranges for all key financial
metrics in the first quarter, and demand for our technology,
intelligence, and expertise remains strong,” said Kevin Mandia,
FireEye chief executive officer.
First Quarter 2019 Financial Results
- Revenue of $211 million increased 6
percent from the first quarter of 2018 and was within the guidance
range of $208 million to $212 million.
- Billings of $182 million increased 4
percent from the first quarter of 2018 and were above the guidance
range of $170 million to $180 million.1
- GAAP gross margin was 66 percent of
revenue, compared to 66 percent of revenue in the first quarter of
2018.
- Non-GAAP gross margin was 74 percent of
revenue, compared to 74 percent of revenue in the first quarter of
2018, and was consistent with the guidance of approximately 74
percent of revenue.1
- GAAP operating margin was negative 30
percent of revenue, compared to negative 31 percent of revenue in
the first quarter of 2018.
- Non-GAAP operating margin was negative
3 percent of revenue, compared to negative 3 percent of revenue in
the first quarter of 2018, and was within the guidance range of
negative 3 percent to negative 1 percent of revenue.1
- GAAP net loss per share was $0.38,
compared to GAAP net loss per share of $0.39 in the first quarter
of 2018.
- Non-GAAP net loss per share was $0.03,
compared to non-GAAP net loss per share of $0.04 in the first
quarter of 2018, and was within the guidance range of non-GAAP net
loss per share of $0.02 to $0.04.1
- Cash flow generated by operations was
$24 million, compared to cash flow generated by operations of $9
million in the first quarter of 2018, and was above the guidance
range of $10 million to $15 million.
1 A reconciliation of GAAP to non-GAAP financial measures is
provided in the financial statement tables included in this press
release. An explanation of these measures is also included under
the heading “Non-GAAP Financial Measures.”
Second Quarter and Updated 2019 Outlook
FireEye provides guidance based on current market conditions and
expectations.
For the second quarter of 2019, FireEye currently expects:
- Revenue in the range of $212 million to
$216 million.
- Billings in the range of $205 million
to $220 million.
- Non-GAAP gross margin as a percent of
revenue in the range of 74 percent to 75 percent.
- Non-GAAP operating margin as a percent
of revenue in the range of 1 percent to 3 percent.
- Non-GAAP diluted net income per share
between $0.01 and $0.03.
- Cash flow generated by operations
between negative $5 million and negative $10 million.
- Capital expenditures between $10
million and $15 million.
Non-GAAP diluted net income per share for the second quarter
assumes interest income on cash and cash equivalents and short-term
investments will offset cash interest expense associated with the
company’s convertible senior notes, provision for income taxes of
between $1.5 million and $2.0 million, and weighted average diluted
shares outstanding of approximately 207 million.
For 2019, FireEye currently expects:
- Revenue in the range of $880 million to
$890 million.
- Billings in the range of $915 million
to $935 million.
- Non-GAAP gross margin as a percent of
revenue of approximately 75 percent.
- Non-GAAP operating margin as a percent
of revenue between 5 percent and 6 percent.
- Non-GAAP diluted net income per share
between $0.17 and $0.21.
- Cash flow generated by operations
between $95 million and $115 million.
- Capital expenditures between $40
million and $50 million.
Non-GAAP diluted net income per share for 2019 assumes interest
income on cash and cash equivalents and short-term investments will
offset cash interest expense associated with the company's
convertible senior notes, provision for income taxes of between $6
million and $8 million, and weighted average diluted shares
outstanding of approximately 210 million.
Guidance for non-GAAP financial measures excludes stock-based
compensation, amortization of stock-based compensation expense
capitalized in software development costs, amortization of
intangible assets, non-cash interest expense related to the
company’s convertible senior notes, and other non-recurring items.
A reconciliation of non-GAAP guidance measures to corresponding
GAAP measures is not available on a forward-looking basis due to
the uncertainty regarding, and the potential variability of, the
amounts of stock-based compensation expense, amortization of
intangible assets, and non-recurring expenses that may be incurred
in the future. Stock-based compensation expense is impacted by the
company’s future hiring and retention needs, as well as the future
fair market value of the company’s common stock, all of which are
difficult to predict and subject to constant change. The actual
amount of stock-based compensation in the second quarter of 2019
and full year 2019 will have a significant impact on the company’s
GAAP operating margin and net loss per share. Further, amortization
of intangible assets, as well as other non-recurring expenses, if
any, will also impact results. Accordingly, a reconciliation of the
non-GAAP financial measure guidance to the corresponding GAAP
measures for future periods is not available without unreasonable
effort.
Conference Call Information
FireEye will host a conference call today, April 30, 2019, at 5
p.m. Eastern time (2 p.m. Pacific time) to discuss its first
quarter financial results and the company’s outlook for the second
quarter and full year 2019. Interested parties may access the
conference call by dialing 877-312-5521 (domestic) or 678-894-3048
(international). A live audio webcast of the call can be accessed
from the Investor Relations section of the company's website at
https://investors.fireeye.com. An archived version of the webcast
will be available at the same website shortly after the conclusion
of the live event.
Forward-Looking Statements
This press release contains forward-looking statements,
including statements related to future financial results for the
second quarter and full year 2019, including revenue, billings,
non-GAAP gross margin, non-GAAP operating margin, interest income
and expense, provision for income taxes, non-GAAP diluted net
income per share, weighted average diluted shares outstanding, cash
flows generated by operations, and capital expenditures in the
section entitled “Second Quarter and Updated 2019 Outlook”
above.
These forward-looking statements involve risks and
uncertainties, as well as assumptions which, if they do not fully
materialize or prove incorrect, could cause FireEye’s results to
differ materially from those expressed or implied by such
forward-looking statements. The risks and uncertainties that could
cause FireEye’s results to differ materially from those expressed
or implied by such forward-looking statements include customer
demand and adoption of FireEye’s products and services; real or
perceived defects, errors or vulnerabilities in FireEye's products
or services; any delay in the release of FireEye's new products or
services; FireEye's ability to react to trends and challenges in
its business and the markets in which it operates; FireEye's
ability to anticipate market needs or develop new or enhanced
products and services to meet those needs; FireEye’s ability to
hire and retain key executives and employees; FireEye’s ability to
attract new and retain existing customers and train its sales
force; the budgeting cycles, seasonal buying patterns and length of
FireEye’s sales cycle; risks associated with new offerings; sales
and marketing execution risks; the failure to achieve expected
synergies and efficiencies of operations between FireEye and its
acquired companies; the ability of FireEye and its acquired
companies to successfully integrate their respective market
opportunities, technologies, products, personnel and operations;
the ability of FireEye and its partners to execute their
strategies, plans, objectives and expected investments with respect
to FireEye’s partnerships; and general market, political, economic,
and business conditions, as well as those risks and uncertainties
included under the captions “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” in FireEye’s Form 10-K filed with the Securities and
Exchange Commission on February 25, 2019, which should be read in
conjunction with these financial results and is available on the
Investor Relations section of FireEye’s website at
investors.fireeye.com and on the SEC website at www.sec.gov.
All forward-looking statements in this press release are based
on information available to the company as of the date hereof, and
FireEye does not assume any obligation to update the
forward-looking statements provided to reflect events that occur or
circumstances that exist after the date on which they were made,
except as required by law. Any future product, service, feature, or
related specification that may be referenced in this release is for
informational purposes only and is not a commitment to deliver any
offering, technology or enhancement. FireEye reserves the right to
modify future product or service plans at any time.
Non-GAAP Financial Measures
In this release FireEye has provided financial information that
has not been prepared in accordance with generally accepted
accounting principles in the United States (GAAP). These non-GAAP
financial measures are not based on any standardized methodology
and are not necessarily comparable to similar measures used by
other companies. The company uses these non-GAAP financial measures
internally in analyzing its financial results and believes that the
use of these non-GAAP financial measures is useful to investors as
an additional tool to evaluate ongoing operating results and
trends, and in comparing the company's financial results with other
companies in its industry, many of which present similar non-GAAP
financial measures.
Non-GAAP financial measures are not meant to be considered in
isolation or as a substitute for comparable financial information
prepared in accordance with GAAP, and should be read only in
conjunction with the company's consolidated financial statements
prepared in accordance with GAAP. A reconciliation of the company's
non-GAAP financial measures to their most directly comparable GAAP
measures has been provided in the financial statement tables
included in this press release, and investors are encouraged to
review the reconciliation.
Billings. FireEye defines billings as revenue recognized plus
the change in deferred revenue from the beginning to the end of the
period. FireEye excludes deferred revenue assumed in connection
with acquisitions from the billings calculation. The company
considers billings to be a useful metric for management and
investors because billings drive deferred revenue balances, which
are an important indicator of the company’s future revenues.
Revenue recognized from deferred revenue represents a significant
percentage of quarterly revenue. There are a number of limitations
related to the use of billings versus revenue calculated in
accordance with GAAP. First, billings include amounts that have not
yet been recognized as revenue. Second, FireEye’s calculation of
billings may be different from other companies in its industry,
some of which may not use billings, may calculate billings
differently, may have different billing frequencies, or may use
other financial measures to evaluate their performance, all of
which could reduce the usefulness of billings as a comparative
measure. FireEye compensates for these limitations by providing
specific information regarding GAAP revenue and evaluating billings
together with revenue calculated in accordance with GAAP.
Non-GAAP gross margin, operating income, operating margin, net
income (loss), net income (loss) per share, and free cash flow.
FireEye defines non-GAAP gross margin as total gross profit
excluding stock-based compensation expense, amortization of
stock-based compensation expense capitalized in software
development costs, amortization of intangible assets, and, as
applicable, other special or non-recurring items, divided by total
revenue.
FireEye defines non-GAAP operating income (loss) as operating
income (loss) excluding stock-based compensation expense,
amortization of stock-based compensation expense capitalized in
software development costs, amortization of intangible assets,
acquisition-related expenses, restructuring charges, and other
special or non-recurring items. FireEye defines non-GAAP operating
margin as non-GAAP operating income divided by total revenue.
FireEye defines non-GAAP net income (loss) as net income (loss)
excluding stock-based compensation expense, amortization of
stock-based compensation expense capitalized in software
development costs, amortization of intangible assets,
acquisition-related expenses, restructuring charges, other special
or non-recurring items, non-cash interest expense related to the
company’s convertible senior notes, and discrete tax provision
(benefits). FireEye defines non-GAAP diluted net income per share
as non-GAAP net income divided by weighted average diluted shares
outstanding. Weighted average diluted shares used to calculate
non-GAAP diluted net income per share excludes shares issuable upon
conversion of the company's convertible senior notes that are
anti-dilutive. FireEye defines non-GAAP net loss per share as
non-GAAP net loss divided by weighted average basic shares
outstanding, which excludes stock options, restricted stock units,
performance stock units, and shares issuable upon conversion of the
company's convertible senior notes that are anti-dilutive.
FireEye defines free cash flow as cash flow generated by (used
in) operations, less purchases of property and equipment and
demonstration units.
Non-GAAP net loss and net loss per share in the first quarter of
2019 excluded stock-based compensation expense, amortization of
intangible assets, amortization of stock-based compensation expense
capitalized in software development costs, restructuring charges,
non-cash interest expense related to convertible senior notes
issued in June 2015 and the second quarter of 2018, and discrete
provision for income taxes. Weighted average shares outstanding
used to calculate non-GAAP net loss per share excluded stock
options, restricted stock units, performance stock units, and
shares issuable upon conversion of the company's convertible senior
notes that are anti-dilutive.
Non-GAAP net loss and net loss per share in the first quarter of
2018 excluded stock-based compensation expense, amortization of
intangible assets, acquisition-related expenses, non-cash interest
expense related to convertible senior notes issued in June 2015,
and discrete provision for income taxes. Weighted average shares
outstanding used to calculate non-GAAP net loss per share excluded
stock options, restricted stock units, performance stock units, and
shares issuable upon conversion of the company's convertible senior
notes that are anti-dilutive.
FireEye considers these non-GAAP financial measures to be useful
metrics for management and investors because they exclude the
effect of stock-based compensation expense, amortization of
stock-based compensation expense capitalized in software
development costs, amortization of intangible assets, acquisition
related expenses, non-cash interest expense related to the
company’s convertible senior notes, amounts deemed repayment of
accreted debt discount on repurchased convertible senior notes,
change in fair value of contingent earn-out liability,
restructuring charges, and other non-recurring and discrete items
so that management and investors can compare the company's core
business operating results over multiple periods.
There are a number of limitations related to the use of these
non-GAAP financial measures versus their nearest GAAP equivalents.
First, these non-GAAP financial measures exclude stock-based
compensation expense. Stock-based compensation is an important part
of FireEye employees' overall compensation and has been, and will
continue to be for the foreseeable future, a significant recurring
expense in the company's business. Second, the components of the
costs that FireEye excludes in its calculation of these non-GAAP
financial measures, including not only stock-based compensation,
but also amortization of stock-based compensation expense
capitalized in software development costs, non-recurring or
non-operating items such as acquisition related expenses, legal
settlement costs, amortization of intangible assets, non-cash
interest expense related to the company’s convertible senior notes,
amounts deemed repayment of accreted debt discount on convertible
senior notes, non-cash losses related to the retirement of
convertible senior notes prior to maturity, change in fair value of
contingent earn-out liability, restructuring charges, and discrete
tax benefits, may differ from the components excluded by peer
companies when they report their non-GAAP results of operations.
FireEye compensates for these limitations by providing specific
information regarding the GAAP amounts excluded from non-GAAP
financial measures and evaluating non-GAAP financial measures
together with their nearest GAAP equivalents.
About FireEye, Inc.
FireEye is the intelligence-led security company. Working as a
seamless, scalable extension of customer security operations,
FireEye offers a single platform that blends innovative security
technologies, nation-state grade threat intelligence, and
world-renowned Mandiant® consulting. With this approach, FireEye
eliminates the complexity and burden of cyber security for
organizations struggling to prepare for, prevent, and respond to
cyber attacks. FireEye has over 7,900 customers across 103
countries, including more than 50 percent of the Forbes Global
2000.
© 2019 FireEye, Inc. All rights reserved. FireEye and Mandiant
are registered trademarks or trademarks of FireEye, Inc. in the
United States and other countries. All other brands, products, or
service names are or may be trademarks or service marks of their
respective owners.
Source: FireEye
FireEye, Inc. CONDENSED CONSOLIDATED BALANCE
SHEETS (Unaudited, in thousands)
March 31, 2019
December 31, 2018 Assets Current assets: Cash
and cash equivalents $ 406,057 $ 409,829 Short-term investments
723,972 706,691 Accounts receivable, net 111,071 157,817
Inventories 6,635 6,548 Prepaid expenses and other current assets
96,977 100,295 Total current assets 1,344,712 1,381,180 Property
and equipment, net 91,898 89,163 Goodwill 999,804 999,804
Intangible assets, net 131,036 143,162 Deposits and other long-term
assets 140,092 82,769 Total assets $ 2,707,542 $ 2,696,078
Liabilities and Stockholders' Equity Current liabilities: Accounts
payable $ 31,113 $ 26,944 Accrued and other current liabilities
41,884 29,797 Accrued compensation 56,196 63,808 Deferred revenue,
current portion 541,563 556,815 Total current liabilities 670,756
677,364 Convertible senior notes, net 974,355 962,577 Deferred
revenue, non-current portion 364,627 378,013 Other long-term
liabilities 78,363 27,730 Total liabilities 2,088,101 2,045,684
Stockholders' equity: Common stock 20 20 Additional paid-in capital
3,194,484 3,152,159 Treasury stock (150,000) (150,000) Accumulated
other comprehensive loss (202) (2,299) Accumulated deficit
(2,424,861) (2,349,486) Total stockholders’ equity 619,441 650,394
Total liabilities and stockholders' equity $ 2,707,542 $ 2,696,078
FireEye, Inc. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (Unaudited, in thousands, except
per share amounts) Three Months Ended
March 31, 2019 2018 Revenue:
Product, subscription and support $ 169,903 $ 165,473 Professional
services 40,641 33,597 Total revenue 210,544 199,070 Cost of
revenue: (1)(2)(3) Product, subscription and support 48,468 47,429
Professional services 23,100 20,500 Total cost of revenue 71,568
67,929 Total gross profit 138,976 131,141 Operating expenses: (1)
Research and development (2)(3) 67,395 66,196 Sales and marketing
(2) 103,896 97,251 General and administrative (4) 27,376 28,418
Restructuring charges (5) 3,799 — Total operating expenses 202,466
191,865 Operating loss (63,490) (60,724) Other expense, net (6)
(9,703) (10,053) Loss before income taxes (73,193) (70,777)
Provision for income taxes (7) 2,182 1,053 Net loss attributable to
common stockholders $ (75,375) $ (71,830) Net loss per share
attributable to common stockholders, basic and diluted $ (0.38) $
(0.39) Weighted average shares used in per share calculations,
basic and diluted 197,819 186,456
FireEye,
Inc. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited, in thousands) Three
Months Ended March 31, 2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (75,375) $
(71,830) Adjustments to reconcile net loss to net cash provided by
operating activities: Depreciation and amortization 23,833 22,389
Stock-based compensation 40,323 42,148 Non-cash interest expense
related to convertible senior notes 11,778 9,694 Deferred income
taxes 475 (60) Other 1,101 1,342 Changes in operating assets and
liabilities, net of assets acquired and liabilities assumed in
business acquisitions: Accounts receivable 46,479 42,986
Inventories (395) (1,373) Prepaid expenses and other assets 6,975
(6,330) Accounts payable 6,802 (5,354) Accrued liabilities 758
4,254 Accrued compensation (7,611) (5,568) Deferred revenue
(28,639) (23,965) Other long-term liabilities (2,051) 854 Net cash
provided by operating activities $ 24,453 $ 9,187 CASH FLOWS FROM
INVESTING ACTIVITIES: Purchases of property and equipment and
demonstration units (13,503) (14,487) Purchases of short-term
investments (156,533) (109,469) Proceeds from maturities of
short-term investments 141,004 104,711 Business acquisitions, net
of cash acquired — (5,977) Lease deposits (36) (116) Net cash used
in investing activities (29,068) (25,338) CASH FLOWS FROM FINANCING
ACTIVITIES: Proceeds from exercise of equity awards 843 3,110 Net
cash provided by financing activities 843 3,110 Net change in cash
and cash equivalents (3,772) (13,041) Cash and cash equivalents,
beginning of period 409,829 180,891 Cash and cash equivalents, end
of period $ 406,057 $ 167,850
FireEye, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited,
in thousands, except per share amounts)
Three Months Ended March 31, 2019
2018 GAAP operating loss $ (63,490) $ (60,724) Stock-based
compensation expense (1) 40,323 42,148 Amortization of stock-based
compensation capitalized in software development costs (3) 793
401
Amortization of intangible assets (2) 12,126 12,614 Acquisition
related expenses (4) — 264 Restructuring charges (5) 3,799 —
Non-GAAP operating loss $ (6,449) $
(5,297)
GAAP gross margin 66% 66% Stock-based compensation expense (1) 4%
4% Amortization of stock-based compensation capitalized in software
development costs (3) —% —% Amortization of intangible assets (2)
4% 4% Non-GAAP gross margin 74% 74% GAAP operating margin (30)%
(31)% Stock-based compensation expense (1) 19% 21% Amortization of
stock-based compensation capitalized in software development costs
(3) —% —% Amortization of intangible assets (2) 6% 7% Acquisition
related expenses (4) —% —% Restructuring charges (5) 2% —% Non-GAAP
operating margin (3)% (3)% GAAP net loss $ (75,375) $ (71,830)
Stock-based compensation expense (1) 40,323 42,148 Amortization of
stock-based compensation capitalized in software development costs
(3) 793
401
Amortization of intangible assets (2) 12,126 12,614 Acquisition
related expenses (4) — 264 Restructuring charges (5) 3,799 —
Non-cash interest expense related to convertible senior notes (6)
11,778 9,694 Adjustment to provision (benefit) from income taxes
(7) 611 (382) Non-GAAP net loss $ (5,945) $
(7,091)
GAAP net loss per common share, basic and diluted $ (0.38) $ (0.39)
Stock-based compensation expense (1) 0.21 0.23 Amortization of
stock-based compensation capitalized in software development costs
(3) — — Amortization of intangible assets (2) 0.06 0.07 Acquisition
related expenses (4) — — Restructuring charges (5) 0.02 — Non-cash
interest expense related to convertible senior notes (6) 0.06 0.05
Adjustment to provision for (benefit from) income taxes (7) — —
Non-GAAP net loss per common share, basic and diluted $ (0.03) $
(0.04) Weighted average shares used in per share calculation for
GAAP, basic and diluted 197,819 186,456 Weighted average shares
used in per share calculation for Non-GAAP, basic and diluted
197,819 186,456 GAAP net cash provided by operating
activities $ 24,453 $ 9,187 Purchase of property and equipment and
demonstration units (13,503) (14,487) Free cash flow $ 10,950 $
(5,300) (1) Includes stock-based compensation expense
as follows: Cost of product, subscription and support revenue $
3,947 $ 3,622 Cost of professional services revenue 3,709 3,902
Research and development expense 12,424 14,353 Sales and marketing
expense 12,540 12,977 General and administrative expense 7,703
7,294 Total stock-based compensation expense $ 40,323 $ 42,148
(2) Includes amortization of intangible assets as follows:
Cost of product, subscription and support revenue $ 8,229 $ 8,662
Research and development expense 118 157 Sales and marketing
expense 3,779 3,795 Total amortization of intangible assets $
12,126 $ 12,614 (3) Includes amortization of stock-based
compensation capitalized in software development costs as follows:
Cost of product, subscription and support revenue $ 203 $
102
Cost of professional services revenue 102
52
Research and development expense 488
247
Total amortization of stock-based compensation capitalized in
software development costs $ 793 $
401
(4) Includes acquisition related expenses as follows:
General and administrative expense $ — $ 264 (5) Includes
restructuring charges as follows: Restructuring charges $ 3,799 $ —
(6) Includes non-cash interest expense related to
convertible senior notes as follows: Other expense, net $ 11,778 $
9,694 (7) Includes income tax effect of non-GAAP adjustments
as follows: Provision for (benefit from) income taxes $ 611 $ (382)
FireEye, Inc. RECONCILIATION OF NON-GAAP
BILLINGS TO REVENUE (Unaudited, in thousands)
Three Months Ended March 31, 2019
2018 GAAP revenue $ 210,544 $ 199,070 Add
change in deferred revenue (28,638) (23,964) Non-GAAP billings $
181,906 $ 175,106
FireEye, Inc. BILLINGS
BREAKOUT (Unaudited, in thousands)
Three Months Ended March 31, 2019
2018 Product and related subscription and support billings $
100,596 $ 90,365 Cloud subscription and managed services 43,113
57,110 Professional services billings 38,197 27,631 Non-GAAP
billings $ 181,906 $ 175,106
FireEye, Inc.
REVENUE BREAKOUT (Unaudited, in thousands)
Three Months Ended March 31,
2019
2018 Product and related subscription and
support revenue $ 118,448 $ 121,092 Cloud subscription and managed
services revenue 51,455 44,381 Professional services revenue 40,641
33,597 Total revenue $ 210,544 $ 199,070
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190430006180/en/
Media contact:Dan WireFireEye,
Inc.415-895-2101dan.wire@fireeye.com
Investor contact:Kate
PattersonFireEye, Inc.408-321-4957kate.patterson@fireeye.com
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