FireEye Inc. (NASDAQ:FEYE) announced second-quarter 2018 results on Wednesday after the market closed. The company reported revenue and earnings near the high end of expectations and a continued shift toward recurring business, and increased its full-year billings guidance.

Shares were down modestly in response -- but still up around 15% from its 52-week lows set earlier this year. Let's take a closer look at what the cybersecurity leader accomplished over the past few months and what investors should expect in the coming quarters.

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IMAGE SOURCE: GETTY IMAGES

FireEye results: The raw numbers

Metric

Q2 2018

Q2 2017

Year-Over-Year Growth

Revenue

$202.7 million

$191.7 million

5.7%

GAAP net income (loss)

($72.9 million)

($68.3 million)

N/A

GAAP earnings (loss) per share

($0.38)

($0.39)

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 achieved a break-even quarter, at $0.00 per share.
  • Both the top and bottom lines arrived at the high ends of FireEye's respective guidance ranges provided in May, which called for revenue of $199 million to $203 million and an adjusted net loss per share in the range of $0.03 to $0.00.
  • Billings grew 13% year over year, to $196 million, also above guidance for $180 million to $195 million.
  • Product, subscription, and support revenue increased 5.9%, to $167.4 million.
  • Professional services revenue jumped 4.9%, to $35.3 million.
  • FireEye added 274 net new customers this quarter to bring its total to over 7,100.
  • FireEye also added 75 new Helix platform customers, bringing Helix's total customer base to nearly 300.
  • FireEye secured 37 deals greater than $1 million during the quarter, with 95% including more than one product and roughly half including four or more FireEye product families.

What management said

FireEye CEO Kevin Mandia stated:

Sales growth in the second quarter was broad based across all geographies and product families, and demand for our differentiated security products and services is increasing as we enter the second half of 2018. New logo customers added in the quarter increased year-over-year and sequentially for the first time since early 2016, and we added more than 75 new Helix customers in the second quarter. We continue to leverage our unique innovation cycle to quickly adapt our products with knowledge gained on the front lines of combating cyber attacks.

FireEye CFO Frank Verdecanna added:

Our business continues to shift toward virtual appliances and cloud-based solutions purchased on a subscription basis. In the second quarter, more than 80 percent of our non-services billings were recurring subscriptions and support. The increased revenue visibility inherent in our subscriptions model, combined with more than $1 billion in cash, cash equivalents and short-term investments and deferred revenue of $880 million, provides a solid foundation for balanced growth and profitability in the future. This outlook is reflected in our increased guidance for 2018 billings and non-GAAP operating cash flow.

Looking forward

For the third quarter of 2018, FireEye expects revenue of $206 million to $210 million, billings of $210 million to $220 million, and adjusted net income per share of $0.01 to $0.03. 

Finally, FireEye reiterated its guidance for full-year 2018 revenue of $820 million to $830 million, but also boosted its outlook for billings of $825 million to $845 million (up $10 million from both ends of its previous ranges). FireEye also continues to expect 2018 adjusted net income per share of between $0.00 and $0.04.

In the end, considering FireEye's relative outperformance on both the top and bottom lines, its accelerated customer additions, and its steady shift toward recurring subscription sales, there was plenty to like in this quarterly report. That should give patient investors plenty of reason to rejoice as FireEye continues to solidify its financial position and build on its cybersecurity industry leadership.

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