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FireEye Delivers as Promised but Guides Light Again

By Steve Symington - Updated May 1, 2019 at 6:15AM

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The cybersecurity leader still sees soft growth as it builds its recurring revenue stream.

FireEye (MNDT -0.09%) released first-quarter 2019 results on Tuesday after the market closed, with solid sales and earnings growth arriving well within the guidance ranges that admittedly left investors wanting more earlier this year.

Though the cybersecurity platform company followed by effectively reiterating its full-year outlook, the market is none too pleased with its near-term targets for similarly modest growth in the second quarter. With shares down around 5% in after-hours trading as of this writing, let's take a closer look at what FireEye had to say.

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IMAGE SOURCE: GETTY IMAGES

FireEye results: The raw numbers

Metric

Q1 2019

Q1 2018

Year-Over-Year Growth

Revenue

$210.5 million

$199.1 million

5.7%

GAAP net income (loss)

($75.4 million)

($71.8 million)

N/A

GAAP earnings (loss) per share

($0.38)

($0.39)

N/A

Data source: FireEye. 

What happened with FireEye this quarter?

  • Revenue was just above the midpoint of FireEye's latest guidance for a range of $208 million to $212 million.
  • Adjusted for items like stock-based compensation, FireEye incurred a (non-GAAP) let loss of $5.9 million, or $0.03 per share -- right at the midpoint of guidance for a loss of between $0.02 and $0.04 per share, and narrowed from a $0.04-per-share adjusted net loss in the same year-ago period.
  • Billings grew 4% year over year to $182 million, above the high end of guidance for a range of $170 million to $180 million.
  • Product, subscription, and support revenue grew 2.7% to $169.9 million, and professional services revenue rose 21% to $40.6 million.
  • FireEye added 237 new logo customers during the quarter, bringing its total to more than 7,900 customers.

What management said, looking forward

"We met or exceeded our guidance ranges for all key financial metrics in the first quarter, and demand for our technology, intelligence, and expertise remains strong," stated FireEye CEO Kevin Mandia.

Based on current market conditions, however, FireEye expects second-quarter 2019 revenue of $212 million to $216 million -- up 5.6% year over year at the midpoint -- with billings ranging from $205 million to $220 million, and adjusted net income per share of between $0.01 and $0.03. Though we don't usually pay close attention to Wall Street's demands, most analysts were modeling adjusted earnings of $0.04 per share on revenue near the high end of that range.

Finally, FireEye continues to see 2019 revenue ranging from $880 million to $890 million, with adjusted net income per share of between $0.17 and $0.21. That said, the company also increased both ends of its billings outlook by $5 million for a new range of $915 million to $935 million.

We should remember management's previous elaboration that FireEye is facing top-line headwinds related to both its buildup of deferred and recurring revenue, as well as a relative lack of larger deals (greater than $10 million) expected for the remainder of this year. With shares trading roughly flat so far in 2019, however, it's obvious investors were hoping this report might provide a slightly more pronounced upside surprise.

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