FireEye Soars on Accelerated Growth, Strong Guidance

FireEye Inc. (MNDT) announced better-than-expected fourth-quarter 2017 results on Thursday after the market closed, including broad-based growth across each of its product lines and geographies while closing a record number of large transactions. What's more, the cybersecurity specialist offered an encouraging look at the year ahead.

Let's dig deeper, then, to see what FireEye accomplished over the past few months, as well as what investors can expect in the coming quarters.

IMAGE SOURCE: GETTY IMAGES.

FireEye results: The raw numbers

DATA SOURCE: FIREEYE INC. GAAP = generally accepted accounting principles.

What happened with FireEye this quarter?

• On an adjusted (non-GAAP) basis, which excludes items like stock-based compensation, FireEye generated net income of $1.3 million, swinging from an adjusted net loss of $4.8 million, or $0.03 per share in last year's fourth quarter.
• These results were above the high ends of FireEye's conservative guidance provided last quarter, which called for revenue in the range of $190 million to $196 million, and an adjusted net loss per share ranging from breakeven to $0.03.
• Billings grew 9% year over year to $242.2 million, also above guidance for $210 million to $230 million. Most notably, product subscription billings increased 22% sequentially from last quarter to $117 million.
• Product revenue increased 14% to $38.3 million.
• Subscription and services revenue grew 8.5% to $164 million.
• During the quarter 298 new customers were added, up from 234 last quarter.
• FireEye booked 52 transactions greater than $1 million -- a new company record -- including two transactions of over $5 million.
• The company generated cash flow from operations of $33.6 million.

What management said

FireEye CEO Kevin Mandia stated:

We are building FireEye for the long-term, and we begin 2018 with a solid foundation for future growth and increased profitability. ... The combination of our expertise on the front lines, our threat intelligence, and our machine-generated cyber attack data gives us greater visibility into the threat environment than any other security company. I believe this is a sustainable competitive advantage for us. We leverage our unique insights in our continuous innovation cycle that allows us to rapidly adapt our solutions, deliver expertise on demand, and remain relevant for our customers as the threat landscape evolves.

Looking forward

For the first quarter of 2018, FireEye expects revenue of $192 million to $197 million, billings of $165 million to $175 million, and an adjusted net loss per share ranging from $0.03 to $0.06. By contrast -- though we don't usually pay close attention to Wall Street's near-term demands -- consensus estimates predicted an adjusted loss of $0.05 per share on revenue of just $186.7 million.

Finally, for the full year of 2018, FireEye sees revenue of $815 million to $825 million -- or 9.2% growth from 2017 at the midpoint -- billings of $810 million to $830 million, and adjusted net income between breakeven and $0.04 per share. Here again, FireEye's outlook was more optimistic than investors' expectations for a $0.02-per-share loss on revenue of $799.3 million.

All things considered, there's nothing to dislike about FireEye's strong end to 2017. And it's clear that FireEye is well-positioned to pursue sustained, profitable growth, bolstering its industry leadership as the world increasingly demands cutting-edge cybersecurity solutions.