FireEye Reports Above-Guidance Revenue and Billings and Improved Operating Margins for First Quarter 2017
- All first quarter financial metrics above guidance ranges
- Operating margins improved by more than 50 percent year-over-year
- Initial FireEye Helix purchases delivered to end-user customers
"We made continued progress on our path to profitability in the first
quarter, improving operational efficiency while managing transitions on
multiple fronts," said
"We continue to drive innovation in the security industry -- leveraging
our unique combination of technology, intelligence, and expertise -- and
this has enabled us to move forward with a product strategy that is
aligned with our customers' priorities, including cloud migration,
endpoint upgrades, and improved analytics for more efficient security
operations," added Mandia. "The Helix platform combines our network and
endpoint detection and prevention technologies, our award-winning MVX
engine,
First Quarter 2017 Financial Results
-
Revenue of
$173.7 million , an increase of 3 percent from the first quarter of 2016 and above the guidance range of$160 to$166 million . -
Billings of
$152.4 million , a decrease of 18 percent from the first quarter of 2016 and above the guidance range of$130 to$150 million .1 - GAAP gross margin of 63 percent, compared to 57 percent in the first quarter of 2016.
- Non-GAAP gross margin of 73 percent, compared to 70 percent in the first quarter of 2016 and above the guidance of approximately 70 percent.1
- GAAP operating margin of negative 41 percent, compared to negative 93 percent in the first quarter of 2016.
- Non-GAAP operating margin of negative 7 percent, compared to negative 44 percent in the first quarter of 2016 and better than the guidance range of approximately negative 24 percent to negative 26 percent of revenue.1
-
GAAP net loss per share of
$0.48 , compared to a GAAP net loss per share of$0.98 in the first quarter of 2016. -
Non-GAAP net loss per share of
$0.09 , compared to a non-GAAP net loss per share of$0.47 in the first quarter of 2016 and better than the guidance range of$0.26 to$0.28 .1 -
Cash flow from operations of negative
$17.0 million , compared to cash flow from operations of negative$22.5 million in the first quarter of 2016 and better than the guidance range of negative$30 to negative$40 million .
"We demonstrated significant improvement in efficiency in the first
quarter by reducing our non-GAAP operating loss by
1 A reconciliation of GAAP to non-GAAP financial measures is provided in the financial statement tables included in this press release. An explanation of these measures is also included under the heading "Non-GAAP Financial Measures."
Second Quarter and Updated 2017 Outlook
For the second quarter of 2017,
-
Total revenue in the range of
$173 million to$179 million . -
Billings in the range of
$155 million to$175 million . - Non-GAAP gross margin of approximately 72 percent.
- Non-GAAP operating margin of approximately negative 9 percent to negative 10 percent of revenue.
-
Non-GAAP net loss per share of
$0.10 to$0.14 . -
Cash flow from operations of negative
$17 million to negative$27 million .
Non-GAAP net loss per share for the second quarter assumes interest
expense of approximately
For 2017,
-
Revenue in the range of
$724 million to$736 million . -
Billings in the range of
$745 million to$775 million . - Positive non-GAAP operating income in the fourth quarter of 2017.
-
Non-GAAP net loss per share of
$0.26 to$0.36 . -
Positive cash flow from operations of
$1 to$10 million . -
Capital expenditures between
$40 and$50 million . Capital expenditures expectations for 2017 include an estimated$22 million in capital expenses associated with the expected move of the company's headquarters from five separate buildings to a single building inMilpitas in mid-2017.
Non-GAAP net loss per share for 2017 assumes interest expense of
approximately
Guidance for non-GAAP financial measures excludes stock based compensation, amortization of intangible assets, non-cash interest expense related to the company's convertible senior notes, and other non-recurring expenses. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis due to the uncertainty regarding, and the potential variability of, the amounts of stock-based compensation expense, amortization of intangible assets, and other non-recurring expenses that may be incurred in the future. Stock-based compensation expense is impacted by the company's future hiring and retention needs, as well as the future fair market value of the company's common stock, all of which is difficult to predict and subject to constant change. The actual amount of stock-based compensation in the second quarter of 2017 will have a significant impact on the company's GAAP operating margin and net loss per share. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort.
Conference Call Information
Forward-Looking Statements
This press release contains forward-looking statements, including
statements related to future financial results for the second quarter
and full year 2017, including revenue, revenue growth rates, billings,
billings growth rates, non-GAAP gross margin, non-GAAP operating margin,
operating cash flows, interest expense, provision for income taxes,
non-GAAP net loss per share, weighted average shares outstanding and
capital expenditures in the section entitled "Second Quarter and Updated
2017 Outlook" above, as well as statements related to
These forward-looking statements involve risks and uncertainties, as
well as assumptions which, if they do not fully materialize or prove
incorrect, could cause FireEye's results to differ materially from those
expressed or implied by such forward-looking statements. The risks and
uncertainties that could cause FireEye's results to differ materially
from those expressed or implied by such forward-looking statements
include customer demand and adoption of FireEye's products and services;
real or perceived defects, errors or vulnerabilities in
All forward-looking statements in this press release are based on
information available to the company as of the date hereof, and
Non-GAAP Financial Measures
In this release
Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable financial information prepared in accordance with GAAP, and should be read only in conjunction with the company's consolidated financial statements prepared in accordance with GAAP. A reconciliation of the company's non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included in this press release, and investors are encouraged to review the reconciliation.
Billings.
Non-GAAP gross margin, operating margin, net loss and net loss per
share.
Non-GAAP net loss and net loss per share in the first quarter of 2017
excluded stock-based compensation expense, amortization of intangible
assets, non-cash interest expense related to the convertible senior
notes issued in
There are a number of limitations related to the use of these non-GAAP
financial measures versus their nearest GAAP equivalents. First, these
non-GAAP financial measures exclude stock-based compensation expense.
Stock-based compensation expense has been and will continue to be for
the foreseeable future a significant recurring expense in the company's
business. Stock-based compensation is an important part of
About
© 2017
|
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands) |
||||||||
|
2017 |
2016 |
|||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 163,374 | $ | 223,667 | ||||
| Short-term investments | 711,637 | 712,058 | ||||||
| Accounts receivable, net | 105,900 | 121,150 | ||||||
| Inventories | 6,195 | 5,955 | ||||||
| Prepaid expenses and other current assets | 30,278 | 25,081 | ||||||
| Total current assets | 1,017,384 | 1,087,911 | ||||||
| Property and equipment, net | 60,814 | 61,852 | ||||||
|
|
978,260 | 978,260 | ||||||
| Intangible assets, net | 229,245 | 244,032 | ||||||
| Deposits and other long-term assets | 10,292 | 10,910 | ||||||
| Total assets | $ | 2,295,995 | $ | 2,382,965 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 25,487 | $ | 20,269 | ||||
| Accrued and other current liabilities | 22,067 | 22,997 | ||||||
| Accrued compensation | 50,083 | 96,004 | ||||||
| Deferred revenue, current portion | 396,628 | 397,118 | ||||||
| Total current liabilities | 494,265 | 536,388 | ||||||
| Convertible senior notes, net | 751,206 | 741,980 | ||||||
| Deferred revenue, non-current portion | 235,557 | 256,398 | ||||||
| Other long-term liabilities | 8,320 | 7,087 | ||||||
| Total liabilities | 1,489,348 | 1,541,853 | ||||||
| Stockholders' equity: | ||||||||
| Common stock | 18 | 17 | ||||||
| Additional paid-in capital | 2,731,108 | 2,682,909 | ||||||
|
|
(150,000 | ) | (150,000 | ) | ||||
| Accumulated other comprehensive loss | (1,419 | ) | (1,742 | ) | ||||
| Accumulated deficit | (1,773,060 | ) | (1,690,072 | ) | ||||
| Total stockholders' equity | 806,647 | 841,112 | ||||||
| Total liabilities and stockholders' equity | $ | 2,295,995 | $ | 2,382,965 | ||||
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in thousands, except per share amounts) |
||||||||
|
Three Months Ended |
||||||||
| 2017 | 2016 | |||||||
| Revenue: | ||||||||
| Product | $ | 23,743 | $ | 33,707 | ||||
| Subscription and services | 149,995 | 134,259 | ||||||
|
Total revenue |
173,738 | 167,966 | ||||||
| Cost of revenue: (1)(2) | ||||||||
| Product | 12,851 | 17,133 | ||||||
| Subscription and services | 51,754 | 54,297 | ||||||
| Total cost of revenue | 64,605 | 71,430 | ||||||
| Total gross profit | 109,133 | 96,536 | ||||||
| Operating expenses: (1)(2) | ||||||||
| Research and development | 58,352 | 85,983 | ||||||
| Sales and marketing | 94,880 | 123,028 | ||||||
| General and administrative (3)(4) | 27,615 | 42,256 | ||||||
| Restructuring charges (5) | — | 1,670 | ||||||
| Total operating expenses | 180,847 | 252,937 | ||||||
| Operating loss | (71,714 | ) | (156,401 | ) | ||||
| Other expense, net (6) | (9,981 | ) | (9,529 | ) | ||||
| Loss before income taxes | (81,695 | ) | (165,930 | ) | ||||
| Provision for (benefit from) income taxes (7) | 1,293 | (10,030 | ) | |||||
| Net loss attributable to common stockholders | $ | (82,988 | ) | $ | (155,900 | ) | ||
| Net loss per share attributable to common stockholders, basic and diluted | $ | (0.48 | ) | $ | (0.98 | ) | ||
| Weighted average shares used in per share calculations, basic and diluted | 172,236 | 158,781 | ||||||
|
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited, in thousands) |
||||||||
|
Three Months Ended |
||||||||
| 2017 | 2016 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (82,988 | ) | $ | (155,900 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 26,365 | 30,503 | ||||||
| Stock-based compensation | 43,889 | 64,239 | ||||||
| Non-cash interest expense related to convertible senior notes | 9,226 | 8,780 | ||||||
| Change in fair value of contingent earn-out liability | 13 | — | ||||||
| Deferred income taxes | 251 | (11,053 | ) | |||||
| Other | 2,119 | 938 | ||||||
| Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in business acquisitions: | ||||||||
| Accounts receivable | 14,584 | 43,144 | ||||||
| Inventories | (1,090 | ) | 2,325 | |||||
| Prepaid expenses and other assets | (4,619 | ) | (2,152 | ) | ||||
| Accounts payable | 3,331 | (3,391 | ) | |||||
| Accrued liabilities | (930 | ) | 902 | |||||
| Accrued transaction costs of acquiree | — | (7,727 | ) | |||||
| Accrued compensation | (7,006 | ) | (8,989 | ) | ||||
| Deferred revenue | (21,331 | ) | 17,997 | |||||
| Other long-term liabilities | 1,234 | (2,132 | ) | |||||
| Net cash used in operating activities | (16,952 | ) | (22,516 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of property and equipment and demonstration units | (8,483 | ) | (14,257 | ) | ||||
| Purchases of short-term investments | (98,480 | ) | (88,805 | ) | ||||
| Proceeds from maturities of short-term investments | 94,689 | 111,319 | ||||||
| Proceeds from sales of short-term investments | 3,620 | — | ||||||
| Business acquisitions, net of cash acquired | — | (204,926 | ) | |||||
| Lease deposits | (70 | ) | (678 | ) | ||||
| Net cash used in investing activities | (8,724 | ) | (197,347 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Repayment of debt of acquired business | — | (8,842 | ) | |||||
| Payments for contingent earn-outs | (38,928 | ) | — | |||||
| Payment related to shares withheld for taxes | — | (1,124 | ) | |||||
| Proceeds from exercise of equity awards | 4,311 | 2,840 | ||||||
| Net cash used in financing activities | (34,617 | ) | (7,126 | ) | ||||
| Net change in cash and cash equivalents | (60,293 | ) | (226,989 | ) | ||||
| Cash and cash equivalents, beginning of period | 223,667 | 402,102 | ||||||
| Cash and cash equivalents, end of period | $ | 163,374 | $ | 175,113 | ||||
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited, in thousands, except per share amounts) |
||||||||
|
Three Months Ended |
||||||||
| 2017 | 2016 | |||||||
| GAAP operating loss | $ | (71,714 | ) | $ | (156,401 | ) | ||
| Stock-based compensation expense (1) | 43,889 | 64,067 | ||||||
| Amortization of intangible assets (2) | 14,787 | 15,165 | ||||||
| Acquisition related expenses (3) | — | 2,413 | ||||||
| Change in fair value of contingent earn-out liability (4) | 13 | — | ||||||
| Restructuring charges (5) | — | 1,670 | ||||||
| Non-GAAP operating loss | $ | (13,025 | ) | $ | (73,086 | ) | ||
| GAAP gross margin | 63 | % | 57 | % | ||||
| Stock-based compensation expense (1) | 4 | % | 6 | % | ||||
| Amortization of intangible assets (2) | 6 | % | 7 | % | ||||
| Non-GAAP gross margin | 73 | % | 70 | % | ||||
| GAAP operating margin | (41 | )% | (93 | )% | ||||
| Stock-based compensation expense (1) | 25 | % | 38 | % | ||||
| Amortization of intangible assets (2) | 9 | % | 9 | % | ||||
| Acquisition related expenses (3) | — | % | 1 | % | ||||
| Change in fair value of contingent earn-out liability (4) | — | % | — | % | ||||
| Restructuring charges (5) | — | % | 1 | % | ||||
| Non-GAAP operating margin | (7 | )% | (44 | )% | ||||
| GAAP net loss | $ | (82,988 | ) | $ | (155,900 | ) | ||
| Stock-based compensation expense (1) | 43,889 | 64,067 | ||||||
| Amortization of intangible assets (2) | 14,787 | 15,165 | ||||||
| Acquisition related expenses (3) | — | 2,413 | ||||||
| Change in fair value of contingent earn-out liability (4) | 13 | — | ||||||
| Restructuring charges (5) | — | 1,670 | ||||||
| Non-cash interest expense related to convertible senior notes (6) | 9,226 | 8,780 | ||||||
| Adjustment to provision (benefit) from income taxes (7) | — | (11,282 | ) | |||||
| Non-GAAP net loss | $ | (15,073 | ) | $ | (75,087 | ) | ||
| GAAP net loss per common share, basic and diluted | $ | (0.48 | ) | $ | (0.98 | ) | ||
| Stock-based compensation expense (1) | 0.25 | 0.40 | ||||||
| Amortization of intangible assets (2) | 0.09 | 0.10 | ||||||
| Acquisition related expenses (3) | — | 0.01 | ||||||
| Change in fair value of contingent earn-out liability (4) | — | — | ||||||
| Restructuring charges (5) | — | 0.01 | ||||||
| Non-cash interest expense related to convertible senior notes (6) | 0.05 | 0.06 | ||||||
| Adjustment to provision (benefit) from income taxes (7) | — | (0.07 | ) | |||||
| Non-GAAP net loss per common share, basic and diluted | $ | (0.09 | ) | $ | (0.47 | ) | ||
| Weighted average shares used in per share calculation for GAAP and Non-GAAP, basic and diluted | 172,236 | 158,781 | ||||||
| (1) includes stock-based compensation expense as follows: | ||||||||
| Cost of product revenue | $ | 535 | $ | 667 | ||||
| Cost of subscription and services revenue | 7,497 | 9,601 | ||||||
| Research and development | 14,525 | 24,430 | ||||||
| Sales and marketing | 14,015 | 16,154 | ||||||
| General and administrative | 7,317 | 13,215 | ||||||
| Total stock-based compensation expense | $ | 43,889 | $ | 64,067 | ||||
| (2) includes amortization of intangible assets as follows: | ||||||||
| Cost of product revenue | $ | 2,802 | $ | 3,064 | ||||
| Cost of subscription and services revenue | 7,376 | 7,751 | ||||||
| Research and development | 162 | 131 | ||||||
| Sales and marketing | 4,447 | 4,219 | ||||||
| Total amortization of intangible assets | $ | 14,787 | $ | 15,165 | ||||
| (3) includes acquisition related expenses as follows: | ||||||||
| General and administrative | $ | — | $ | 2,413 | ||||
| (4) includes change in fair value of contingent earn-out liability as follows: | ||||||||
| General and administrative | $ | 13 | $ | — | ||||
| (5) includes restructuring charges as follows: | ||||||||
| Restructuring charges | $ | — | $ | 1,670 | ||||
| (6) includes non-cash interest expense related to convertible senior notes as follows: | ||||||||
| Other expense, net | $ | 9,226 | $ | 8,780 | ||||
| (7) includes adjustment to provision (benefit) from income taxes as follows: | ||||||||
| Income tax effect of non-GAAP adjustment | $ | — | $ | (11,282 | ) | |||
|
RECONCILIATION OF NON-GAAP BILLINGS TO REVENUE (Unaudited, in thousands) |
||||||||
|
Three Months Ended |
||||||||
| 2017 | 2016 | |||||||
| GAAP revenue | $ | 173,738 | $ | 167,966 | ||||
| Add change in deferred revenue | (21,331 | ) | 39,084 | |||||
| Subtotal | 152,407 | 207,050 | ||||||
| Less iSIGHT & Invotas deferred revenue assumed | — | (21,087 | ) | |||||
| Non-GAAP billings | $ | 152,407 | $ | 185,963 | ||||
|
BILLINGS BREAKOUT (Unaudited, in thousands) |
|||||||
|
Three Months Ended |
|||||||
| 2017 | 2016 | ||||||
| Product billings | $ | 23,375 | $ | 33,370 | |||
| Product subscription billings | 73,541 | 88,884 | |||||
| Product billings and product subscription billings | 96,916 | 122,254 | |||||
| Support and maintenance billings | 23,757 | 31,346 | |||||
| Professional services billings | 31,734 | 32,363 | |||||
| Non-GAAP billings | $ | 152,407 | $ | 185,963 | |||
|
REVENUE BREAKOUT (Unaudited, in thousands) |
|||||||
|
Three Months Ended |
|||||||
| 2017 | 2016 | ||||||
| Product revenue | $ | 23,743 | $ | 33,707 | |||
| Product subscription revenue | 87,054 | 74,163 | |||||
| Product revenue and product subscription revenue | 110,797 | 107,870 | |||||
| Support and maintenance revenue | 33,207 | 28,413 | |||||
| Professional services revenue | 29,734 | 31,683 | |||||
| Total revenue | $ | 173,738 | $ | 167,966 | |||
View source version on businesswire.com: http://www.businesswire.com/news/home/20170502006756/en/
Media contact:
vitor.desouza@fireeye.com
or
Investor
contact:
kate.patterson@fireeye.com
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