FireEye Reports Financial Results for First Quarter 2020
- Q1 revenue of
$225 million increased 7 percent from the first quarter of 2019 - Q1 billings of
$170 million decreased 7 percent from the first quarter of 20191 - Q1 ending annual recurring revenue of
$590 million increased 7 percent compared to the end of the first quarter of 2019 - Q1 ending Platform, cloud subscription and managed services annual recurring revenue of
$288 million increased 32 percent compared to the end of the first quarter of 2019
“I believe we performed exceptionally well in the first quarter,” said
“Our ability to adapt to the current environment was the result of the steps we have taken to modernize our business, and our results show that,” added Mandia. “The emerging growth areas of our business -- Platform, Cloud Subscription, and
First Quarter 2020 Financial Results
|
Q1 2020 |
Q1 2019 |
Y/Y change |
Revenue |
|
|
+7% |
Billings1 |
|
|
(7)% |
GAAP gross margin |
64% |
66% |
(2) pts |
Non-GAAP gross margin1 |
71% |
74% |
(3) pts |
GAAP operating margin |
(28)% |
(30)% |
+2 pts |
Non-GAAP operating margin1 |
(1)% |
(3)% |
+2 pts |
GAAP net income (loss) per share |
|
|
|
Non-GAAP net income (loss) per diluted share1 |
|
|
|
Cash flow provided (used) by operating activities |
|
|
|
Capital expenditures |
|
|
|
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.”
"While the COVID-19 pandemic has brought several segments of the global economy to a standstill, the cyber threat environment remains very active," said
Second Quarter and Updated 2020 Outlook
|
Q2 2020 Outlook |
Updated 2020 Outlook |
Revenue |
|
|
Non-GAAP gross margin |
68% - 69% |
69% - 70% |
Non-GAAP operating margin |
(2)%- (1)% |
1% - 3% |
Net interest income (expense) |
~ |
~ |
Provision for non-GAAP income taxes |
|
|
Weighted average shares outstanding |
221 million |
228 million |
Non-GAAP net income (loss) per share |
|
|
Capital expenditures |
~ |
|
Guidance for non-GAAP financial measures excludes stock-based compensation, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, restructuring charges, non-cash interest expense related to the company’s convertible senior notes, and other non-recurring items. 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 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 are difficult to predict and subject to constant change. The actual amount of stock-based compensation expense in the second quarter of 2020 and full year 2020 will have a significant impact on the company’s GAAP operating margin and net loss per share. Further, amortization of intangible assets, as well as other non-recurring expenses, if any, will also impact results. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measures for future periods is not available without unreasonable effort.
Restructuring Approved by Board of Directors
On
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 2020, including revenue, non-GAAP gross margin, non-GAAP operating margin, net interest income and expense, provision for non-GAAP income taxes, weighted average shares outstanding, non-GAAP net income per share, and capital expenditures in the section entitled “Second Quarter and Updated 2020 Outlook” above, as well as expectations regarding
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 income, operating margin, net income (loss), and net income (loss) per share.
Non-GAAP net loss and net loss per share in the first quarter of 2020 excluded stock-based compensation expense, amortization of intangible assets, amortization of stock-based compensation expense capitalized in software development costs, restructuring charges, non-cash interest expense related to convertible senior notes issued in
Non-GAAP net loss and net loss per share in the first quarter of 2019 excluded stock-based compensation expense, amortization of intangible assets, amortization of stock-based compensation expense capitalized in software development costs, restructuring charges, non-cash interest expense related to 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 is an important part of
About
© 2020
|
|||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||
(Unaudited, in thousands) |
|||||||
|
|
|
|
||||
Assets |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
283,866 |
|
|
$ |
334,603 |
|
Short-term investments |
696,104 |
|
|
704,955 |
|
||
Accounts receivable, net |
140,191 |
|
|
171,459 |
|
||
Inventories |
7,158 |
|
|
5,892 |
|
||
Prepaid expenses and other current assets |
98,324 |
|
|
96,827 |
|
||
Total current assets |
1,225,643 |
|
|
1,313,736 |
|
||
Property and equipment, net |
90,613 |
|
|
93,812 |
|
||
Operating right-of-use assets, net |
58,045 |
|
|
58,758 |
|
||
|
1,213,454 |
|
|
1,205,292 |
|
||
Intangible assets, net |
128,110 |
|
|
134,420 |
|
||
Deposits and other long-term assets |
80,521 |
|
|
84,468 |
|
||
Total assets |
$ |
2,796,386 |
|
|
$ |
2,890,486 |
|
|
|
|
|
||||
Liabilities and Stockholders' Equity |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
26,288 |
|
|
$ |
26,271 |
|
Operating lease liabilities, current |
19,017 |
|
|
18,437 |
|
||
Accrued and other current liabilities |
23,794 |
|
|
24,496 |
|
||
Accrued compensation |
57,941 |
|
|
59,513 |
|
||
Convertible senior notes, current, net |
118,805 |
|
|
117,288 |
|
||
Deferred revenue, current |
572,533 |
|
|
603,944 |
|
||
Total current liabilities |
818,378 |
|
|
849,949 |
|
||
Convertible senior notes, non-current, net |
904,120 |
|
|
893,273 |
|
||
Deferred revenue, non-current |
347,323 |
|
|
370,623 |
|
||
Operating lease liabilities, non-current |
68,277 |
|
|
70,481 |
|
||
Deferred Tax Liabilities, non-current |
206 |
|
|
— |
|
||
Other long-term liabilities |
4,474 |
|
|
4,494 |
|
||
Total liabilities |
2,142,778 |
|
|
2,188,820 |
|
||
Stockholders' equity: |
|
|
|
||||
Common stock |
22 |
|
|
22 |
|
||
Additional paid-in capital |
3,488,456 |
|
|
3,457,359 |
|
||
|
(150,000) |
|
|
(150,000) |
|
||
Accumulated other comprehensive loss |
(1,669) |
|
|
1,180 |
|
||
Accumulated deficit |
(2,683,201) |
|
|
(2,606,895) |
|
||
Total stockholders’ equity |
653,608 |
|
|
701,666 |
|
||
Total liabilities and stockholders' equity |
$ |
2,796,386 |
|
|
$ |
2,890,486 |
|
|
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||
(Unaudited, in thousands, except per share amounts) |
|||||||
|
Three Months Ended |
||||||
|
2020 |
|
2019 |
||||
Revenue: |
|
|
|
||||
Product, subscription and support |
$ |
174,083 |
|
|
$ |
169,903 |
|
Professional services |
50,639 |
|
|
40,641 |
|
||
Total revenue |
224,722 |
|
|
210,544 |
|
||
Cost of revenue: (1)(2)(3) |
|
|
|
||||
Product, subscription and support |
53,136 |
|
|
48,468 |
|
||
Professional services |
28,450 |
|
|
23,100 |
|
||
Total cost of revenue |
81,586 |
|
|
71,568 |
|
||
Total gross profit |
143,136 |
|
|
138,976 |
|
||
Operating expenses: |
|
|
|
||||
Research and development (1)(2)(3) |
67,503 |
|
|
67,395 |
|
||
Sales and marketing (1)(2) |
100,200 |
|
|
103,896 |
|
||
General and administrative (1) |
27,429 |
|
|
27,376 |
|
||
Restructuring charges (4) |
10,974 |
|
|
3,799 |
|
||
Total operating expenses |
206,106 |
|
|
202,466 |
|
||
Operating loss |
(62,970) |
|
|
(63,490) |
|
||
Other expense, net (5) |
(12,411) |
|
|
(9,703) |
|
||
Loss before income taxes |
(75,381) |
|
|
(73,193) |
|
||
Provision for income taxes (6) |
925 |
|
|
2,182 |
|
||
Net loss |
$ |
(76,306) |
|
|
$ |
(75,375) |
|
Net loss per share, basic and diluted |
$ |
(0.35) |
|
|
$ |
(0.38) |
|
Weighted average shares used in per share calculations, basic and diluted |
217,789 |
|
|
197,819 |
|
|
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
(Unaudited, in thousands) |
|||||||
|
Three Months Ended |
||||||
|
2020 |
|
2019 |
||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
||||
Net loss |
$ |
(76,306) |
|
|
$ |
(75,375) |
|
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
||||
Depreciation and amortization |
24,241 |
|
|
23,833 |
|
||
Stock-based compensation |
36,178 |
|
|
40,323 |
|
||
Non-cash interest expense related to convertible senior notes |
12,365 |
|
|
11,778 |
|
||
Deferred income taxes |
143 |
|
|
475 |
|
||
Other |
6,267 |
|
|
1,101 |
|
||
Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in business acquisitions: |
|
|
|
||||
Accounts receivable |
30,256 |
|
|
46,479 |
|
||
Inventories |
(935) |
|
|
(395) |
|
||
Prepaid expenses and other assets |
2,827 |
|
|
6,975 |
|
||
Accounts payable |
1,717 |
|
|
6,802 |
|
||
Accrued liabilities |
(1,319) |
|
|
758 |
|
||
Accrued compensation |
(1,572) |
|
|
(7,611) |
|
||
Deferred revenue |
(54,711) |
|
|
(28,639) |
|
||
Other long-term liabilities |
(3,607) |
|
|
(2,051) |
|
||
Net cash provided by operating activities |
(24,456) |
|
|
24,453 |
|
||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
||||
Purchases of property and equipment and demonstration units |
(11,680) |
|
|
(13,503) |
|
||
Purchases of short-term investments |
(103,131) |
|
|
(156,533) |
|
||
Proceeds from maturities of short-term investments |
108,462 |
|
|
141,004 |
|
||
Business acquisitions, net of cash acquired |
(12,948) |
|
|
— |
|
||
Purchase of investment in privately held company |
(1,000) |
|
|
— |
|
||
Lease deposits |
67 |
|
|
(36) |
|
||
Net cash used in investing activities |
(20,230) |
|
|
(29,068) |
|
||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
||||
Payment related to shares withheld for taxes |
(7,399) |
|
|
— |
|
||
Proceeds from exercise of equity awards |
1,348 |
|
|
843 |
|
||
Net cash provided by financing activities |
(6,051) |
|
|
843 |
|
||
Net change in cash and cash equivalents |
(50,737) |
|
|
(3,772) |
|
||
Cash and cash equivalents, beginning of period |
334,603 |
|
|
409,829 |
|
||
Cash and cash equivalents, end of period |
$ |
283,866 |
|
|
$ |
406,057 |
|
|
|||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
|||||||
(Unaudited, in thousands, except per share amounts) |
|||||||
|
Three Months Ended |
||||||
|
2020 |
|
2019 |
||||
GAAP operating loss |
$ |
(62,970) |
|
|
$ |
(63,490) |
|
Stock-based compensation expense (1) |
36,178 |
|
|
40,323 |
|
||
Amortization of stock-based compensation capitalized in software development costs (3) |
1,026 |
|
|
793 |
|
||
Amortization of intangible assets (2) |
11,960 |
|
|
12,126 |
|
||
Restructuring charges (4) |
10,974 |
|
|
3,799 |
|
||
Non-GAAP operating income (loss) |
$ |
(2,832) |
|
|
$ |
(6,449) |
|
GAAP gross margin |
64 |
% |
|
66 |
% |
||
Stock-based compensation expense (1) |
3 |
% |
|
4 |
% |
||
Amortization of intangible assets (2) |
4 |
% |
|
4 |
% |
||
Non-GAAP gross margin |
71 |
% |
|
74 |
% |
||
GAAP operating margin |
(28) |
% |
|
(30) |
% |
||
Stock-based compensation expense (1) |
16 |
% |
|
19 |
% |
||
Amortization of intangible assets (2) |
6 |
% |
|
6 |
% |
||
Restructuring charges (4) |
5 |
% |
|
2 |
% |
||
Non-GAAP operating margin |
(1) |
% |
|
(3) |
% |
||
GAAP net loss |
$ |
(76,306) |
|
|
$ |
(75,375) |
|
Stock-based compensation expense (1) |
36,178 |
|
|
40,323 |
|
||
Amortization of stock-based compensation capitalized in software development costs (3) |
1,026 |
|
|
793 |
|
||
Amortization of intangible assets (2) |
11,960 |
|
|
12,126 |
|
||
Restructuring charges (4) |
10,974 |
|
|
3,799 |
|
||
Non-cash interest expense related to convertible senior notes (5) |
12,365 |
|
|
11,778 |
|
||
Adjustment to provision (benefit) from income taxes (6) |
(315) |
|
|
611 |
|
||
Non-GAAP net income (loss) |
$ |
(4,118) |
|
|
$ |
(5,945) |
|
GAAP net loss per common share, basic and diluted |
$ |
(0.35) |
|
|
$ |
(0.38) |
|
Stock-based compensation expense (1) |
0.17 |
|
|
0.21 |
|
||
Amortization of intangible assets (2) |
0.05 |
|
|
0.06 |
|
||
Restructuring charges (4) |
0.05 |
|
|
0.02 |
|
||
Non-cash interest expense related to convertible senior notes (5) |
0.06 |
|
|
0.06 |
|
||
Non-GAAP net income (loss) per common share, basic |
$ |
(0.02) |
|
|
$ |
(0.03) |
|
Non-GAAP net income (loss) per common share, diluted |
$ |
(0.02) |
|
|
$ |
(0.03) |
|
Weighted average shares used in per share calculation for GAAP, basic and diluted |
217,789 |
|
|
197,819 |
|
||
Weighted average shares used in per share calculation for Non-GAAP, basic |
217,789 |
|
|
197,819 |
|
||
Weighted average shares used in per share calculation for Non-GAAP, diluted |
217,789 |
|
|
197,819 |
|
||
|
|
|
|
||||
(1) Includes stock-based compensation expense as follows: |
|
|
|
||||
Cost of product, subscription and support revenue |
$ |
3,742 |
|
|
$ |
3,947 |
|
Cost of professional services revenue |
3,900 |
|
|
3,709 |
|
||
Research and development expense |
11,545 |
|
|
12,424 |
|
||
Sales and marketing expense |
11,486 |
|
|
12,540 |
|
||
General and administrative expense |
5,505 |
|
|
7,703 |
|
||
Total stock-based compensation expense |
$ |
36,178 |
|
|
$ |
40,323 |
|
|
|
|
|
||||
(2) Includes amortization of intangible assets as follows: |
|
|
|
||||
Cost of product, subscription and support revenue |
$ |
7,730 |
|
|
$ |
8,229 |
|
Research and development expense |
109 |
|
|
118 |
|
||
Sales and marketing expense |
4,121 |
|
|
3,779 |
|
||
Total amortization of intangible assets |
$ |
11,960 |
|
|
$ |
12,126 |
|
|
|
|
|
||||
(3) Includes amortization of stock-based compensation capitalized in software development |
|
|
|
||||
Cost of product, subscription and support revenue |
$ |
54 |
|
|
$ |
203 |
|
Cost of professional services revenue |
27 |
|
|
102 |
|
||
Research and development expense |
945 |
|
|
488 |
|
||
Total amortization of stock-based compensation capitalized in software development costs |
$ |
1,026 |
|
|
$ |
793 |
|
|
|
|
|
||||
(4) Includes restructuring charges as follows: |
|
|
|
||||
Restructuring charges |
$ |
10,974 |
|
|
$ |
3,799 |
|
|
|
|
|
||||
(5) Includes non-cash interest expense related to convertible senior notes as follows: |
|
|
|
||||
Other expense, net |
$ |
12,365 |
|
|
$ |
11,778 |
|
|
|
|
|
||||
(6) Includes income tax effect of non-GAAP adjustments as follows: |
|
|
|
||||
Benefit from income taxes |
$ |
(315) |
|
|
$ |
611 |
|
|
|||||||
RECONCILIATION OF NON-GAAP BILLINGS TO REVENUE |
|||||||
(Unaudited, in thousands) |
|||||||
|
Three Months Ended |
||||||
|
2020 |
|
2019 |
||||
GAAP revenue |
$ |
224,722 |
|
|
$ |
210,544 |
|
Add change in deferred revenue |
(54,711) |
|
|
(28,638) |
|
||
Non-GAAP billings |
$ |
170,011 |
|
|
$ |
181,906 |
|
|
|||||||
BILLINGS BREAKOUT |
|||||||
(Unaudited, in thousands) |
|||||||
|
Three Months Ended |
||||||
|
2020 |
|
2019 |
||||
Product and related subscription and support billings |
$ |
75,233 |
|
|
$ |
100,596 |
|
Platform, cloud subscription and managed services billings |
52,454 |
|
|
43,113 |
|
||
Professional services billings |
42,324 |
|
|
38,197 |
|
||
Non-GAAP billings |
$ |
170,011 |
|
|
$ |
181,906 |
|
|
|||||||
REVENUE BREAKOUT |
|||||||
(Unaudited, in thousands) |
|||||||
|
Three Months Ended |
||||||
|
2020 |
|
2019 |
||||
Product and related subscription and support revenue |
$ |
105,688 |
|
|
$ |
118,448 |
|
Platform, cloud subscription and managed services revenue |
68,395 |
|
|
51,455 |
|
||
Professional services revenue |
50,639 |
|
|
40,641 |
|
||
Total revenue |
$ |
224,722 |
|
|
$ |
210,544 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20200428005983/en/
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