What happened

Shares of cybersecurity company FireEye (NASDAQ:FEYE) slumped on Thursday after management reported fourth-quarter results. While FireEye beat analyst estimates for both revenue and earnings, the company's guidance came up short of expectations. The stock was down about 12.6% at 11:15 a.m. EST.

So what

FireEye reported fourth-quarter revenue of $218 million, up 6% year over year and less than $1 million above the average analyst estimate. Billings rose 10% year over year to $265 million, and ending annual recurring revenue surged 9% to $553 million.

A declining chart.

Image source: Getty Images.

Non-GAAP earnings per share came in at $0.06, up from $0.04 in the prior-year period and $0.01 higher than analysts were expecting. Cash flow from operations was $31 million, down from $34 million in the prior-year period but within the company's guidance range.

FireEye CFO Frank Verdecanna talked up the company's shift toward recurring revenue: "Our business continued to evolve toward a recurring subscription model. Recurring subscriptions and support billings increased more than 20 percent year over year and accounted for 82 percent of non-services billings in 2018."

Check out the latest FireEye earnings call transcript.

Now what

While FireEye's fourth-quarter results were better than expected, its guidance was mixed. FireEye expects to produce first-quarter revenue between $208 million and $212 million, mostly below the average analyst estimate of $211.55 million. First-quarter non-GAAP EPS is expected between a loss of $0.02 and $0.04, below the profit of $0.01 that analysts were expecting.

For 2019, FireEye sees revenue between $880 million and $890 million and non-GAAP earnings per share between $0.17 and $0.21. Analysts were expecting revenue guidance of $890.32 million and EPS guidance of $0.18.

FireEye's 2019 revenue guidance implies growth of just 6.5% at the midpoint. The stock now trades for around 85 times the midpoint of the company's non-GAAP earnings guidance. That tepid growth just isn't enough to justify a nosebleed valuation.