FireEye Inc. (MNDT) released exceptional third-quarter 2018 results on Tuesday after the market closed, highlighting solid billings growth, improving margins, and increased full-year guidance.
With shares of the cybersecurity specialist up nearly 10% in response, let's take a closer look at how it started the second half of the year, and what we should be watching in the coming months.
Image source: Getty Images.
FireEye results: The raw numbers
| Metric |
Q3 2018 |
Q3 2017 |
Year-Over-Year Growth |
|---|---|---|---|
|
Revenue |
$211.7 million |
$197.4 million |
7.2% |
|
GAAP net income (loss) |
($50.0 million) |
($69.2 million) |
N/A |
|
GAAP earnings (loss) per share |
($0.26) |
($0.39) |
N/A |
Data source: FireEye Inc.
What happened with FireEye this quarter?
- Adjusted for items like stock-based compensation, FireEye's (non-GAAP) net income arrived at $11.9 million, or $0.06 per share, swinging from an adjusted loss of $0.02 per share in the same year-ago period.
- By comparison, the guidance the company provided in August called for revenue in the range of $206 million to $210 million, and adjusted net income per share of between $0.00 and $0.04.
- Billings rose 8% year over year to $219 million, near the high end of guidance for a range of $210 million to $220 million.
- Product, subscription, and support revenue grew 7.6% to $175.7 million.
- Professional services revenue increased 5.3% to $36 million, including a record quarter for its Mandiant subsidiary.
- FireEye added 243 new logo customers this quarter, maintaining a customer retention rate of roughly 90%. It also closed over 100 new Helix platform customers.
- The company closed 43 transactions during the quarter that were valued at more than $1 million each; 42 of those included multiple products or services, and roughly 75% involved three or more.
What management said
CEO Kevin Mandia stated:
We have made tremendous strides in improving productivity and efficiency. We have returned FireEye to sustainable growth while increasing profitability and cash flow. At the same time, we have accelerated innovation across our portfolio of products and services. With our expertise and intelligence driving a continuous innovation cycle, this is an exciting time to be at FireEye.
Looking forward
For the fourth quarter of 2018, FireEye sees revenue ranging from $214 million to $218 million, billings of $245 million to $255 million, and adjusted net income per share between $0.04 and $0.06.
As such, the company increased its full-year guidance to call for 2018 revenue of $827 million to $831 million (up from $820 million to $830 million before), billings of $835 million to $845 million (up $10 million from the bottom end of its old range), and adjusted net income per share of between $0.06 and $0.08 (up from between $0.00 and $0.04 previously).
All things considered, this release left no room for skeptics to doubt whether the company's recent momentum was sustainable. Demand for its growing stable of products and services remains strong, its customers remain loyal, and FireEye continues to reinvest in innovation to bolster its industry leadership. And it's no surprise to see its stock approaching its 52-week high as the market absorbs the news.
