FireEye Reports First Quarter 2015 Financial Results
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First Quarter 2015 Revenue and Billings
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Revenue: First quarter revenue was
$125.4 million , an increase of 69 percent from the first quarter of 2014 and above the previously issued guidance range of$118 to$122 million . Total revenue included product revenue of$40.2 million , product subscription revenue of$43.4 million , support and maintenance revenue of$19.1 million and professional services revenue of$22.7 million .
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Billings1: First quarter billings were
$151.6 million , an increase of 53 percent from the first quarter of 2014 and above the previously issued guidance range of$130 to$140 million . Total billings included product billings of$38.2 million , product subscription billings of$63.7 million , support and maintenance billings of$22.8 million , and professional services billings of$26.8 million . The average contract length for new subscription and support billings was approximately 32 months, consistent with the first quarter of 2014.
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Deferred revenue: Deferred revenue totaled
$378.8 million at the end of the first quarter, an increase of$166.0 million , or 78 percent, from the end of the first quarter of 2014. Current deferred revenue was$217.2 million , an increase of$95.8 million from the end of the first quarter of 2014 and included$9.7 million in deferred product revenue and$207.5 million in deferred subscription, support and services revenue. Non-current deferred revenue was$161.6 million , an increase of$70.3 million from the end of the first quarter of 2014. Non-current deferred revenue included$3.9 million of deferred product revenue and$157.6 million of deferred subscription, support and services revenue.
"Demand was strong across all product segments, indicating that customers are turning to us for a range of solutions," said DeWalt. "
First Quarter 2015 Operating Performance
"We continued to make significant progress on the company's path to profitability," said
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Cash flow from operations: First quarter cash flow from operations was negative
$3.2 million , compared to negative$22.6 million in the first quarter of 2014. Purchases of property and equipment and demonstration units totaled$12.7 million in the first quarter of 2015, compared to$14.2 million in the first quarter of 2014.
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Non-GAAP net loss1: First quarter non-GAAP net loss was
$72.3 million , or 58 percent of revenue, compared to a non-GAAP net loss of$71.4 million , or 97 percent of revenue in the first quarter of 2014. Non-GAAP loss per share was$0.48 , based on approximately 152 million weighted average shares outstanding, compared to$0.53 , based on approximately 134 million weighted average shares, in the first quarter of 2014. Non-GAAP net loss and net loss per share in the first quarters of 2014 and 2015 excluded stock-based compensation expense and amortization of intangible assets. Additionally, non-GAAP net loss for the first quarter of 2014 excluded$1.0 million of acquisition related expenses and$7.2 million in discrete tax benefits.
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GAAP net loss: First quarter GAAP net loss was
$134.0 million , or$0.88 per share, based on approximately 152 million weighted average shares outstanding. This compares to a GAAP net loss of$101.2 million , or$0.76 per share, based on approximately 134 million weighted average shares outstanding, in the first quarter of 2014. First quarter 2014 GAAP net loss included a discrete tax benefit of$7.2 million related to the acquisition ofMandiant .
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 2015 Outlook
For the second quarter of 2015,
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Total billings in the range of
$165 to$170 million . - Gross margin in the range of 70 to 73 percent of total revenue.
- Research and development expenses in the range of 36 to 40 percent of total revenue.
- Sales and marketing expenses in the range of 66 to 70 percent of total revenue.
- General and administrative expenses in the range of 15 to 18 percent of total revenue.
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Loss per share of
$0.47 to$0.50 , based on estimated weighted average shares outstanding of approximately 154 million.
For 2015, the company currently expects total revenue in the range of
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Total billings in the range of
$825 to$835 million . - Gross margin in the range of 71 to 75 percent of total revenue.
- Research and development expenses in the range of 35 to 38 percent of total revenue.
- Sales and marketing expenses in the range of 64 to 68 percent of total revenue.
- General and administrative expenses in the range of 14 to 17 percent of total revenue.
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Loss per share of
$1.75 to$1.85 , based on estimated weighted average shares outstanding of approximately 155 million. -
Negative cash flow from operations in the range of
$65 to$80 million .
Guidance for non-GAAP financial measures excludes stock based compensation, amortization of intangible assets, and other non-recurring expenses. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis.
Recent Business Highlights
Since its initial public offering in the third quarter of 2013,
New Partnerships
During this period,
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Announced a global alliance with HP to deliver incident response and advanced threat services to HP customers worldwide.
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Announced a partnership with Check Point Software Technologies to share threat intelligence between the FireEye NX Network Threat Prevention Platform and Check Point's firewalls.
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Established the
Fuel Cybersecurity Intelligence Coalition to share threat intelligence and integrate security workflows across IT technologies and vendors.
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Launched the first joint
Advanced Security Operations Center with Singapore Telecommunications Limited (Singtel ) inSingapore .
Certification and Awards
During this period,
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Certification under the SAFETY Act by
Department of Homeland Security for the FireEye MVX™ threat detection engine and DTI™ Cloud Platform.
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The award of Best Security Company and the
Reader Trust award for Best APT Protection atSC Magazine's annual award ceremony at the RSA conference.
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Top ranking overall in Cybersecurity Venture's annual Cybersecurity 500 list of companies to watch.
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Best of 2014 recognition in the "Advanced Threat Detection" and "Threat Intelligence" categories in the
SANS Institute's annual Best of Awards program.
Innovation and Leadership
During this period,
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Announced new mobile security integration for Samsung KNOX-enabled devices.
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Published threat intelligence, attack campaign analyses and insights on cyber security trends, including:
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Discovery of multiple mobile threats and vulnerabilities, including a flaw in the Android mobile operating system that allows easy access to biometric data, such as fingerprints.
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Operation Russian Doll, in which attackers are using a pair of zero day exploits to target an international government entity.
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A long-running campaign by threat group APT30, detailed in the report "APT30 and the Mechanics of a Long-Running Cyber Espionage Operation."
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A new Word document exploit kit advertised in underground forums as an "APT tool" to be used in targeted attacks. The tool is accompanied by a statistics package so attackers can track the effectiveness of their campaigns.
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A "malvertising" operation in which advertiser real-time bidding requests resulted in the download of malicious files.
- Publication of multiple security reports, including a Mobile Threat Report, the 2015 M-Trends report, and a joint Singtel-FireEye Southeast Asia Cyber Threat Report.
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Discovery of multiple mobile threats and vulnerabilities, including a flaw in the Android mobile operating system that allows easy access to biometric data, such as fingerprints.
Conference Call Information
Forward-Looking Statements
This press release contains forward-looking statements, including statements related to future total revenue, billings, non-GAAP gross margins, non-GAAP research and development expenses as a percent of total revenue, non-GAAP sales and marketing expenses as a percent of total revenue, non-GAAP general and administrative expenses as a percent of total revenue, non-GAAP loss per share, weighted average shares outstanding, and cash flow from operations in the section entitled "Second Quarter and Updated 2015 Outlook" above, as well as statements related to the continued momentum in
These forward-looking statements involve risks and uncertainties, as well as assumptions which, if they do not fully materialize or prove incorrect, could cause
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.
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
© 2015
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CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
(Unaudited, in thousands) | ||||||||||
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2015 | 2014 | |||||||||
Assets | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 136,776 | $ | 146,363 | ||||||
Short-term investments | 260,838 | 255,845 | ||||||||
Accounts receivable, net | 160,095 | 193,182 | ||||||||
Inventories | 10,505 | 7,952 | ||||||||
Deferred tax assets, current portion | 21,968 | 25,126 | ||||||||
Prepaid expenses and other current assets | 27,457 | 28,669 | ||||||||
Total current assets | 617,639 | 657,137 | ||||||||
Property and equipment, net | 81,030 | 82,298 | ||||||||
Goodwill | 750,288 | 750,288 | ||||||||
Intangible assets, net | 249,858 | 261,625 | ||||||||
Deposits and other long-term assets | 7,186 | 7,533 | ||||||||
Total assets | $ | 1,706,001 | $ | 1,758,881 | ||||||
Liabilities and Stockholders' Equity | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 28,505 | $ | 34,057 | ||||||
Accrued and other current liabilities | 26,060 | 24,596 | ||||||||
Accrued compensation | 61,876 | 64,551 | ||||||||
Deferred revenue, current portion | 217,211 | 203,877 | ||||||||
Total current liabilities | 333,652 | 327,081 | ||||||||
Deferred revenue, non-current portion | 161,553 | 148,666 | ||||||||
Deferred tax liabilities, non-current portion | 21,780 | 24,903 | ||||||||
Other long-term liabilities | 9,400 | 7,403 | ||||||||
Total liabilities | 526,385 | 508,053 | ||||||||
Stockholders' equity: | ||||||||||
Common stock | 16 | 15 | ||||||||
Additional paid-in capital | 1,980,894 | 1,918,546 | ||||||||
Accumulated other comprehensive loss | (38 | ) | (441 | ) | ||||||
Accumulated deficit | (801,256 | ) | (667,292 | ) | ||||||
Total stockholders' equity | 1,179,616 | 1,250,828 | ||||||||
Total liabilities and stockholders' equity | $ | 1,706,001 | $ | 1,758,881 |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||
(Unaudited, in thousands, except per share amounts) | |||||||||
Three Months Ended | |||||||||
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2015 | 2014 | ||||||||
Revenue: | |||||||||
Product | $ | 40,237 | $ | 24,252 | |||||
Subscription and services | 85,133 | 49,728 | |||||||
Total revenue | 125,370 | 73,980 | |||||||
Cost of revenue: (1)(2) | |||||||||
Product | 15,200 | 10,326 | |||||||
Subscription and services | 36,851 | 24,967 | |||||||
Total cost of revenue | 52,051 | 35,293 | |||||||
Total gross profit | 73,319 | 38,687 | |||||||
Operating expenses:(1)(2) | |||||||||
Research and development | 65,605 | 41,970 | |||||||
Sales and marketing | 107,595 | 76,854 | |||||||
General and administrative (3) | 32,607 | 27,100 | |||||||
Total operating expenses | 205,807 | 145,924 | |||||||
Operating loss | (132,488 | ) | (107,237 | ) | |||||
Other expense, net | (499 | ) | (16 | ) | |||||
Loss before income taxes | (132,987 | ) | (107,253 | ) | |||||
Provision for (benefit from) income taxes (4) | 977 | (6,042 | ) | ||||||
Net loss attributable to common stockholders | $ | (133,964 | ) | $ | (101,211 | ) | |||
Net loss per share attributable to common stockholders, basic and diluted | $ | (0.88 | ) | $ | (0.76 | ) | |||
Weighted average shares used in per share calculations, basic and diluted | 151,651 | 133,976 |
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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||||||
(Unaudited, in thousands) | |||||||||||
Three Months Ended | |||||||||||
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2015 | 2014 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
Net loss | $ | (133,964 | ) | $ | (101,211 | ) | |||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
Depreciation and amortization | 26,581 | 20,706 | |||||||||
Stock-based compensation expense | 49,875 | 25,194 | |||||||||
Deferred income taxes | 82 | (7,518 | ) | ||||||||
Other | 509 | 89 | |||||||||
Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in business combinations: | |||||||||||
Accounts receivable | 32,736 | 15,221 | |||||||||
Inventories | (2,554 | ) | 1,405 | ||||||||
Prepaid expenses and other assets | 127 | (2,509 | ) | ||||||||
Accounts payable | (4,219 | ) | (12,396 | ) | |||||||
Accrued liabilities | 2,068 | 6,016 | |||||||||
Accrued compensation | (2,675 | ) | 5,703 | ||||||||
Deferred revenue | 26,221 | 25,207 | |||||||||
Other long-term liabilities | 1,997 | 1,505 | |||||||||
Net cash used in operating activities | (3,216 | ) | (22,588 | ) | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
Purchase of property and equipment and demonstration units | (12,669 | ) | (14,187 | ) | |||||||
Purchase of short-term investments | (39,857 | ) | (143,522 | ) | |||||||
Maturities of short-term investments | 34,655 | - | |||||||||
Lease deposits | (370 | ) | (360 | ) | |||||||
Net cash used in investing activities | (18,241 | ) | (158,069 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
Net proceeds from follow-on public offering | - | 445,934 | |||||||||
Proceeds from exercise of equity awards | 11,870 | 2,075 | |||||||||
Net cash provided by financing activities | 11,870 | 448,009 | |||||||||
Net change in cash and cash equivalents | (9,587 | ) | 267,352 | ||||||||
Cash and cash equivalents, beginning of year | 146,363 | 173,918 | |||||||||
Cash and cash equivalents, end of year | $ | 136,776 | $ | 441,270 |
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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | ||||||||
(Unaudited, in thousands, except per share amounts) | ||||||||
Three Months Ended | ||||||||
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2015 | 2014 | |||||||
GAAP operating loss | $ | (132,488 | ) | $ | (107,237 | ) | ||
Stock-based compensation expense (1) | 49,875 | 25,194 | ||||||
Amortization of intangible assets (2) | 11,766 | 10,798 | ||||||
Acquisition related expenses (3) | - | 1,047 | ||||||
Non-GAAP operating loss | $ | (70,847 | ) | $ | (70,198 | ) | ||
GAAP net loss | $ | (133,964 | ) | $ | (101,211 | ) | ||
Stock-based compensation expense (1) | 49,875 | 25,194 | ||||||
Amortization of intangible assets (2) | 11,766 | 10,798 | ||||||
Acquisition related expenses (3) | - | 1,047 | ||||||
Non-recurring benefit from income taxes (4) | - | (7,242 | ) | |||||
Non-GAAP net loss | $ | (72,323 | ) | $ | (71,414 | ) | ||
GAAP net loss per common share, basic and diluted | $ | (0.88 | ) | $ | (0.76 | ) | ||
Stock-based compensation expense (1) | 0.33 | 0.19 | ||||||
Amortization of intangible assets (2) | 0.08 | 0.08 | ||||||
Acquisition related expenses (3) | - | 0.01 | ||||||
Non-recurring benefit from income taxes (4) | - | (0.05 | ) | |||||
Non-GAAP net loss per common share, basic and diluted | $ | (0.48 | ) | $ | (0.53 | ) | ||
Weighted average shares used in per share calculations for GAAP and Non-GAAP, basic and diluted | 151,651 | 133,976 | ||||||
(1) includes stock-based compensation expense as follows: | ||||||||
Cost of product revenue | $ | 268 | $ | 145 | ||||
Cost of subscription and services revenue | 6,378 | 3,420 | ||||||
Research and development | 16,035 | 4,603 | ||||||
Sales and marketing | 16,454 | 8,688 | ||||||
General and administrative | 10,740 | 8,338 | ||||||
Total stock-based compensation expense | $ | 49,875 | $ | 25,194 | ||||
(2) includes amortization of intangible assets as follows: | ||||||||
Cost of product revenue | $ | 3,064 | $ | 2,431 | ||||
Cost of subscription and services revenue | 5,475 | 5,390 | ||||||
Sales and marketing | 3,227 | 2,977 | ||||||
Total amortization of intangible assets | $ | 11,766 | $ | 10,798 | ||||
(3) includes acquisition related expenses as follows: | ||||||||
General and administrative | $ | - | $ | 1,047 | ||||
(4) includes discrete benefit from income taxes as follows: | ||||||||
Provision for (benefit from) income taxes | $ | - | $ | (7,242 | ) |
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RECONCILIATION OF NON-GAAP BILLINGS TO REVENUE | ||||||
(Unaudited, in thousands) | ||||||
Three Months Ended | ||||||
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2015 | 2014 | |||||
GAAP revenue | $ | 125,370 | $ | 73,980 | ||
Add change in deferred revenue | 26,221 | 25,208 | ||||
Non-GAAP billings | $ | 151,591 | $ | 99,188 | ||
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BILLINGS BREAKOUT | ||||||
(Unaudited, in thousands) | ||||||
Three Months Ended | ||||||
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2015 | 2014 | |||||
Product billings | $ | 38,234 | $ | 26,076 | ||
Product subscription billings | 63,736 | 39,435 | ||||
Product billings and product subscription billings | 101,970 | 65,511 | ||||
Support and maintenance billings | 22,842 | 15,695 | ||||
Professional services billings | 26,779 | 17,982 | ||||
Non-GAAP billings | $ | 151,591 | $ | 99,188 | ||
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REVENUE BREAKOUT | ||||||
(Unaudited, in thousands) | ||||||
Three Months Ended | ||||||
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2015 | 2014 | |||||
Product revenue | $ | 40,237 | $ | 24,252 | ||
Product subscription revenue | 43,376 | 22,819 | ||||
Product revenue and product subscription revenue | 83,613 | 47,071 | ||||
Support and maintenance revenue | 19,084 | 10,751 | ||||
Professional services revenue | 22,673 | 16,158 | ||||
Total revenue | $ | 125,370 | $ | 73,980 |
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