FireEye Inc. (NASDAQ:FEYE) announced first-quarter 2018 results on Wednesday after the market closed, highlighting stronger-than-expected revenue growth and narrowing losses, as more customers embraced its powerful Helix cybersecurity platform. FireEye also boosted its full-year revenue guidance.

But keeping in mind shares were up nearly 30% over the past year as of yesterday's close, FireEye stock pulled back as the market appeared unimpressed by that outlook. Let's take a closer look at what FireEye had to say and what investors should be watching as the year progresses.

Holographic key within a globe.

IMAGE SOURCE: GETTY IMAGES.

FireEye results: The raw numbers

Metric

Q1 2018

Q1 2017

Year-Over-Year Growth

Revenue

$199.1 million

$184.8 million

7.7%

GAAP net income (loss)

($71.8 million)

($77.2 million)

N/A

GAAP earnings (loss) per share

($0.39)

($0.45)

N/A

DATA SOURCE: FIREEYE INC.

What happened with FireEye this quarter?

  • On an adjusted (non-GAAP) basis, which excludes items like stock-based compensation, FireEye's net loss was $7.5 million, or $0.04 per share, narrowed from an adjusted loss of $0.05 per share in last year's first quarter.
  • For perspective, FireEye's latest guidance, provided in February, called for lower revenue of $192 million to $197 million and an adjusted net loss per share of $0.03 to $0.06.
  • Billings increased 21% year over year, to $175.1 million, also above guidance for a range of $165 million to $175 million.
  • Product, subscription, and support revenue grew 7.6%, to $165.5 million.
  • Professional services revenue grew 8.3%, to $33.6 million.
  • Fireeye added 230 new customers during the quarter compared to 237 in the same year-ago period. During the subsequent call, management acknowledged the slight decline. But they also noted they're seeing a "healthy increase" in new customers that's consistent with expectations, given sales-cycle lengths following the launch of their next-generation Endpoint with Antivirus product two quarters ago.
  • FireEye also added 40 new Helix customers, bringing Helix's total customer base to more than 200. 
  • FireEye secured 29 transactions greater than $1 million during the quarter, with roughly 85% of those transactions including more than one product.

What management said

FireEye CEO Kevin Mandia stated:

We continued to execute well in the first quarter and delivered revenue above our guidance range and billings slightly above our guidance range. We also continued to drive innovation across our product portfolio, added new features and functionality, and updated our pricing and packaging. Our frontline knowledge of the threat landscape and how organizations are combating cyber attacks is at the heart of our unique innovation cycle. FireEye network, email and endpoint security products continue to detect attacks that evade other security solutions. Our Helix platform operationalizes our intelligence and expertise to reduce the complexity of security operations and capture the untapped potential of prior security investments.

Looking forward

For the second quarter of 2018, FireEye anticipates revenue of $199 million to $203 million, billings of $180 million to $195 million, and an adjusted net loss of $0.03 to breakeven. By comparison -- and though we don't usually pay close attention to Wall Street's demands -- consensus estimates predicted a second-quarter loss of $0.01 per share on revenue right at the midpoint of FireEye's range.

As such, FireEye increased both ends of its full-year revenue and billings guidance ranges by $5 million, calling for 2018 sales of $820 million to $830 million and billings of $815 million to $835 million. But the company continues to expect adjusted net income between breakeven and $0.04 per share. For perspective, most investors were looking for adjusted earnings right at the midpoint of that range at $0.02 per share, but on revenue near the low end of FireEye's outlook.

To be clear, this was a great quarter from FireEye that leaves little not to like from an investor's perspective. The company over delivered relative to its previous guidance, continues to steadily add customers for its core products and platforms, and offered forward guidance that should have largely appeased Wall Street.

Given FireEye stock's enviable gain over the past year, it seems the market was looking for a more aggressive increase to its full-year view.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends FireEye. The Motley Fool has a disclosure policy.