FireEye Reports Fourth Quarter and Fiscal Year 2016 Financial Results
- Continued improvement in operational efficiency resulted in lower operating losses
- Strong collections performance and lower expenses generated positive operating cash flow
- Management appointments and executive transitions announced
"Since mid-2016 we have focused on two strategic initiatives -- rightsizing our cost structure and evolving our product portfolio -- and we made great progress on both fronts in the fourth quarter," said
"We believe the innovations we introduced in the second half of 2016, together with the announcement of our Helix platform in November, will enable
Fourth Quarter 2016 Financial Results
- Revenue of
$184.7 million , consistent with the fourth quarter of 2015. - Billings of
$221.8 million , a decrease of 14 percent from the fourth quarter of 2015.1 - GAAP gross margin of 65 percent, compared to 66 percent in the fourth quarter of 2015.
- Non-GAAP gross margin of 74 percent, compared to 75 percent in the fourth quarter of 2015.1
- GAAP operating margin of negative 27 percent, compared to negative 67 percent in the fourth quarter of 2015.
- Non-GAAP operating margin of negative one percent, compared to negative 28 percent in the fourth quarter of 2015.1
- GAAP net loss per share of
$0.37 , compared to a GAAP net loss per share of$0.87 in the fourth quarter of 2015. - Non-GAAP net loss per share of
$0.03 , compared to a non-GAAP net loss per share of$0.36 in the fourth quarter of 2015.1 - Cash flow from operations of
$6.9 million , compared to cash flow from operations of$9.4 million in the fourth quarter of 2015.
"We continued to make great progress on our path to profitability in the fourth quarter as operating losses narrowed, and we came within a few million dollars of positive non-GAAP operating income," said
2016 Financial Results
- Revenue of
$714.1 million , an increase of 15 percent from 2015. - Billings of
$819.5 million , an increase of three percent from 2015.1 - GAAP gross margin of 62 percent, consistent with 63 percent in 2015.
- Non-GAAP gross margin of 73 percent, compared to 73 percent in 2015.1
- GAAP operating margin of negative 62 percent, compared to negative 81 percent in 2015.
- Non-GAAP operating margin of negative 21 percent, compared to negative 38 percent in 2015.1
- GAAP net loss per share of
$2.94 , compared to a GAAP net loss per share of$3.50 in 2015. - Non-GAAP net loss per share of
$0.99 , compared to a non-GAAP net loss per share of$1.61 in 2015.1 - Cash flow from operations of negative
$14.6 million , compared to positive cash flow from operations of$37.0 million in 2015.
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."
2017 and First Quarter 2017 Outlook
For 2017,
- Expects billings and revenue trends to improve throughout the year, with renewed organic growth in the second half of 2017.
- Reaffirms the company's stated objective of positive non-GAAP operating income by the fourth quarter of 2017.
- Expects to generate positive cash flow from operations for the full year.
- Anticipates capital expenditures between
$40 and$45 million . Capital expenditures for 2017 include an estimated$22 million in capital expenses associated with the company's move from five separate buildings to a single building inMilpitas in the summer of 2017.
For the first quarter of 2017,
- Total revenue in the range of
$160 million to$166 million . - Billings in the range of
$130 million to$150 million . - Non-GAAP gross margin of approximately 70 percent.
- Non-GAAP operating margin of approximately negative 24 percent to negative 26 percent of revenue.
- Non-GAAP net loss per share of
$0.26 to$0.28 . - Cash flow from operations of negative
$30 million to negative$40 million .
Non-GAAP net loss per share for the first quarter assumes cash-based interest expense of approximately
Guidance for non-GAAP financial measures excludes stock based compensation, amortization of intangible assets, acquisition-related expenses, restructuring charges, changes in fair value of contingent earn-out liabilities, 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 as a result of 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 first 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.
Management Appointments and Executive Transitions
Prior to joining
"With more than four years at
The company has also expanded its sales leadership team by hiring
"These appointments add depth and breadth to our management team," said Mandia. "I believe our new sales leadership will help stabilize the field, increase productivity, and ensure proper capacity, training and enablement in 2017. The creation of the Global Services and Intelligence business unit under
"Dave has been a friend and advisor to me since we first began working together in 2012, and he will continue to be both going forward," said Mandia. "Dave helped establish
Conference Call Information
Forward-Looking Statements
This press release contains forward-looking statements, including statements related to future financial results, including revenue, non-GAAP billings, non-GAAP gross margin, non-GAAP operating margin, operating cash flows, interest expense, provision for income taxes, non-GAAP net loss per share, and weighted average shares outstanding in the section entitled "2017 and First Quarter 2017 Outlook" above, as well as statements related to the size of
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.
Non-GAAP net loss and net loss per share in the fourth quarter of 2016 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) | |||||||||||
2016 |
2015 |
||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 223,667 | $ | 402,102 | |||||||
| Short-term investments | 712,058 | 767,775 | |||||||||
| Accounts receivable, net | 121,150 | 172,752 | |||||||||
| Inventories | 5,955 | 13,747 | |||||||||
| Prepaid expenses and other current assets | 25,081 | 30,883 | |||||||||
| Total current assets | 1,087,911 | 1,387,259 | |||||||||
| Property and equipment, net | 61,852 | 78,368 | |||||||||
| 978,260 | 750,288 | ||||||||||
| Intangible assets, net | 244,032 | 214,560 | |||||||||
| Deposits and other long-term assets | 10,910 | 10,998 | |||||||||
| Total assets | $ | 2,382,965 | $ | 2,441,473 | |||||||
| Liabilities and Stockholders' Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 20,269 | $ | 43,650 | |||||||
| Accrued and other current liabilities | 22,997 | 29,820 | |||||||||
| Accrued compensation | 96,004 | 79,294 | |||||||||
| Deferred revenue, current portion | 397,118 | 305,169 | |||||||||
| Total current liabilities | 536,388 | 457,933 | |||||||||
| Convertible senior notes, net | 741,980 | 706,198 | |||||||||
| Deferred revenue, non-current portion | 256,398 | 221,829 | |||||||||
| Other long-term liabilities | 7,087 | 11,141 | |||||||||
| Total liabilities | 1,541,853 | 1,397,101 | |||||||||
| Stockholders' equity: | |||||||||||
| Common stock | 17 | 16 | |||||||||
| Additional paid-in capital | 2,682,909 | 2,403,088 | |||||||||
| (150,000 | ) | (150,000 | ) | ||||||||
| Accumulated other comprehensive loss | (1,742 | ) | (2,225 | ) | |||||||
| Accumulated deficit | (1,690,072 | ) | (1,206,507 | ) | |||||||
| Total stockholders' equity | 841,112 | 1,044,372 | |||||||||
| Total liabilities and stockholders' equity | $ | 2,382,965 | $ | 2,441,473 | |||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||
| (Unaudited, in thousands, except per share amounts) | ||||||||||||||||||
| Three Months Ended |
Year Ended |
|||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||||
| Revenue: | ||||||||||||||||||
| Product | $ | 33,586 | $ | 66,598 | $ | 151,926 | $ | 216,632 | ||||||||||
| Subscription and services | 151,110 | 118,176 | 562,188 | 406,335 | ||||||||||||||
| Total revenue | 184,696 | 184,774 | 714,114 | 622,967 | ||||||||||||||
| Cost of revenue: (1)(2) | ||||||||||||||||||
| Product | 15,391 | 20,915 | 65,158 | 74,481 | ||||||||||||||
| Subscription and services | 48,567 | 42,260 | 206,710 | 158,723 | ||||||||||||||
| Total cost of revenue | 63,958 | 63,175 | 271,868 | 233,204 | ||||||||||||||
| Total gross profit | 120,738 | 121,599 | 442,246 | 389,763 | ||||||||||||||
| Operating expenses: (1)(2) | ||||||||||||||||||
| Research and development | 54,574 | 71,690 | 279,594 | 279,467 | ||||||||||||||
| Sales and marketing | 84,310 | 135,432 | 439,499 | 476,166 | ||||||||||||||
| General and administrative (3)(4) | 30,914 | 37,978 | 139,839 | 141,790 | ||||||||||||||
| Restructuring charges (5) | -- | -- | 27,630 | -- | ||||||||||||||
| Total operating expenses | 169,798 | 245,100 | 886,562 | 897,423 | ||||||||||||||
| Operating loss | (49,060 | ) | (123,501 | ) | (444,316 | ) | (507,660 | ) | ||||||||||
| Other expense, net (6) | (12,733 | ) | (11,097 | ) | (44,534 | ) | (27,465 | ) | ||||||||||
| Loss before income taxes | (61,793 | ) | (134,598 | ) | (488,850 | ) | (535,125 | ) | ||||||||||
| Provision for (benefit from) income taxes (7) | (257 | ) | 1,550 | (8,721 | ) | 4,090 | ||||||||||||
| Net loss attributable to common stockholders | $ | (61,536 | ) | $ | (136,148 | ) | $ | (480,129 | ) | $ | (539,215 | ) | ||||||
| Net loss per share attributable to common stockholders, basic and diluted | $ | (0.37 | ) | $ | (0.87 | ) | $ | (2.94 | ) | $ | (3.50 | ) | ||||||
| Weighted average shares used in per share calculations, basic and diluted | 167,228 | 156,137 | 163,211 | 154,120 | ||||||||||||||
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||||||
| (Unaudited, in thousands) | |||||||||||
| Year Ended |
|||||||||||
| 2016 | 2015 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net loss | $ | (480,129 | ) | $ | (539,215 | ) | |||||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||||
| Depreciation and amortization | 119,267 | 111,956 | |||||||||
| Stock-based compensation | 199,066 | 222,119 | |||||||||
| Non-cash interest expense related to convertible senior notes | 35,782 | 20,069 | |||||||||
| Change in fair value of contingent earn-out liability | 2,356 | -- | |||||||||
| Deferred income taxes | (11,926 | ) | (1,353 | ) | |||||||
| Other | 9,836 | 4,672 | |||||||||
| Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in business acquisitions: | |||||||||||
| Accounts receivable | 61,785 | 19,126 | |||||||||
| Inventories | 1,415 | (7,820 | ) | ||||||||
| Prepaid expenses and other assets | 9,344 | (675 | ) | ||||||||
| Accounts payable | (19,093 | ) | 7,705 | ||||||||
| Accrued liabilities | (11,154 | ) | 7,495 | ||||||||
| Accrued transaction costs of acquiree | (7,727 | ) | -- | ||||||||
| Accrued compensation | (24,621 | ) | 14,742 | ||||||||
| Deferred revenue | 105,431 | 174,455 | |||||||||
| Other long-term liabilities | (4,217 | ) | 3,739 | ||||||||
| Net cash provided by (used in) operating activities | (14,585 | ) | 37,015 | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Purchases of property and equipment and demonstration units | (36,314 | ) | (54,549 | ) | |||||||
| Purchases of short-term investments | (507,073 | ) | (769,097 | ) | |||||||
| Proceeds from maturities of short-term investments | 554,358 | 245,116 | |||||||||
| Proceeds from sales of short-term investments | 4,507 | 4,807 | |||||||||
| Business acquisitions, net of cash acquired | (204,926 | ) | -- | ||||||||
| Purchase of investment in private company | -- | (1,800 | ) | ||||||||
| Lease deposits | (248 | ) | (1,226 | ) | |||||||
| Net cash used in investing activities | (189,696 | ) | (576,749 | ) | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Net proceeds from issuance of convertible senior notes | -- | 896,530 | |||||||||
| Prepaid forward stock purchase | -- | (150,000 | ) | ||||||||
| Repayment of debt of acquired business | (8,842 | ) | -- | ||||||||
| Payments for contingent earn-outs | (112 | ) | -- | ||||||||
| Payment related to shares withheld for taxes | (1,124 | ) | (2,027 | ) | |||||||
| Proceeds from employee stock purchase plan | 22,080 | 21,880 | |||||||||
| Proceeds from exercise of equity awards | 13,844 | 29,090 | |||||||||
| Net cash provided by financing activities | 25,846 | 795,473 | |||||||||
| Net change in cash and cash equivalents | (178,435 | ) | 255,739 | ||||||||
| Cash and cash equivalents, beginning of period | 402,102 | 146,363 | |||||||||
| Cash and cash equivalents, end of period | $ | 223,667 | $ | 402,102 | |||||||
| RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | |||||||||||||||||
| (Unaudited, in thousands, except per share amounts) | |||||||||||||||||
| Three Months Ended |
Year Ended |
||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||
| GAAP operating loss | $ | (49,060 | ) | $ | (123,501 | ) | $ | (444,316 | ) | $ | (507,660 | ) | |||||
| Stock-based compensation expense (1) | 30,949 | 57,780 | 197,751 | 222,431 | |||||||||||||
| Amortization of intangible assets (2) | 16,079 | 11,766 | 64,028 | 47,064 | |||||||||||||
| Acquisition related expenses (3) | -- | 1,431 | 2,413 | 1,431 | |||||||||||||
| Change in fair value of contingent earn-out liability (4) | 600 | -- | 2,356 | -- | |||||||||||||
| Restructuring charges (5) | -- | -- | 27,630 | -- | |||||||||||||
| Non-GAAP operating loss | $ | (1,432 | ) | $ | (52,524 | ) | $ | (150,138 | ) | $ | (236,734 | ) | |||||
| GAAP gross margin | 65 | % | 66 | % | 62 | % | 63 | % | |||||||||
| Stock-based compensation expense (1) | 3 | % | 4 | % | 5 | % | 5 | % | |||||||||
| Amortization of intangible assets (2) | 6 | % | 5 | % | 6 | % | 5 | % | |||||||||
| Non-GAAP gross margin | 74 | % | 75 | % | 73 | % | 73 | % | |||||||||
| GAAP operating margin | (27 | )% | (67 | )% | (62 | )% | (81 | )% | |||||||||
| Stock-based compensation expense (1) | 17 | % | 31 | % | 28 | % | 36 | % | |||||||||
| Amortization of intangible assets (2) | 9 | % | 7 | % | 9 | % | 7 | % | |||||||||
| Acquisition related expenses (3) | -- | % | 1 | % | -- | % | -- | % | |||||||||
| Change in fair value of contingent earn-out liability (4) | -- | % | -- | % | -- | % | -- | % | |||||||||
| Restructuring charges (5) | -- | % | -- | % | 4 | % | -- | % | |||||||||
| Non-GAAP operating margin | (1 | )% | (28 | )% | (21 | )% | (38 | )% | |||||||||
| GAAP net loss | $ | (61,536 | ) | $ | (136,148 | ) | $ | (480,129 | ) | $ | (539,215 | ) | |||||
| Stock-based compensation expense (1) | 30,949 | 57,780 | 197,751 | 222,431 | |||||||||||||
| Amortization of intangible assets (2) | 16,079 | 11,766 | 64,028 | 47,064 | |||||||||||||
| Acquisition related expenses (3) | -- | 1,431 | 2,413 | 1,431 | |||||||||||||
| Change in fair value of contingent earn-out liability (4) | 600 | -- | 2,356 | -- | |||||||||||||
| Restructuring charges (5) | -- | -- | 27,630 | -- | |||||||||||||
| Non-cash interest expense related to convertible senior notes (6) | 9,112 | 8,672 | 35,782 | 20,069 | |||||||||||||
| Non-recurring benefit from income taxes (7) | (20 | ) | -- | (11,839 | ) | -- | |||||||||||
| Non-GAAP net loss | $ | (4,816 | ) | $ | (56,499 | ) | $ | (162,008 | ) | $ | (248,220 | ) | |||||
| GAAP net loss per common share, basic and diluted | $ | (0.37 | ) | $ | (0.87 | ) | $ | (2.94 | ) | $ | (3.50 | ) | |||||
| Stock-based compensation expense (1) | 0.19 | 0.37 | 1.21 | 1.44 | |||||||||||||
| Amortization of intangible assets (2) | 0.10 | 0.08 | 0.39 | 0.31 | |||||||||||||
| Acquisition related expenses (3) | -- | 0.01 | 0.01 | 0.01 | |||||||||||||
| Change in fair value of contingent earn-out liability (4) | -- | -- | 0.02 | -- | |||||||||||||
| Restructuring charges (5) | -- | -- | 0.17 | -- | |||||||||||||
| Non-cash interest expense related to convertible senior notes (6) | 0.05 | 0.06 | 0.22 | 0.13 | |||||||||||||
| Non-recurring benefit from income taxes (7) | -- | -- | (0.07 | ) | -- | ||||||||||||
| Non-GAAP net loss per common share, basic and diluted | $ | (0.03 | ) | $ | (0.36 | ) | $ | (0.99 | ) | $ | (1.61 | ) | |||||
| Weighted average shares used in per share calculation for GAAP and Non-GAAP, basic and diluted | 167,228 | 156,137 | 163,211 | 154,120 | |||||||||||||
| (1) includes stock-based compensation expense as follows: | |||||||||||||||||
| Cost of product revenue | $ | 295 | $ | 374 | $ | 2,092 | $ | 1,588 | |||||||||
| Cost of subscription and services revenue | 4,798 | 7,673 | 29,811 | 29,435 | |||||||||||||
| Research and development | 9,878 | 16,917 | 64,755 | 68,329 | |||||||||||||
| Sales and marketing | 10,075 | 18,862 | 57,750 | 73,286 | |||||||||||||
| General and administrative | 5,903 | 13,954 | 43,343 | 49,793 | |||||||||||||
| Total stock-based compensation expense | $ | 30,949 | $ | 57,780 | $ | 197,751 | $ | 222,431 | |||||||||
| (2) includes amortization of intangible assets as follows: | |||||||||||||||||
| Cost of product revenue | $ | 3,064 | $ | 3,064 | $ | 12,256 | $ | 12,256 | |||||||||
| Cost of subscription and services revenue | 8,406 | 5,475 | 33,176 | 21,900 | |||||||||||||
| Research and development | 162 | -- | 618 | -- | |||||||||||||
| Sales and marketing | 4,447 | 3,227 | 17,978 | 12,908 | |||||||||||||
| Total amortization of intangible assets | $ | 16,079 | $ | 11,766 | $ | 64,028 | $ | 47,064 | |||||||||
| (3) includes acquisition related expenses as follows: | |||||||||||||||||
| General and administrative | $ | -- | $ | 1,431 | $ | 2,413 | $ | 1,431 | |||||||||
| (4) includes change in fair value of contingent earn-out liability as follows: | |||||||||||||||||
| General and administrative | $ | 600 | $ | -- | $ | 2,356 | $ | -- | |||||||||
| (5) includes restructuring charges as follows: | |||||||||||||||||
| Restructuring charges | $ | -- | $ | -- | $ | 27,630 | $ | -- | |||||||||
| (6) Includes non-cash interest expense related to convertible senior notes as follows: | |||||||||||||||||
| Other expense, net | $ | 9,112 | $ | 8,672 | $ | 35,782 | $ | 20,069 | |||||||||
| (7) includes discrete benefit from income taxes as follows: | |||||||||||||||||
| Provision for (benefit from) income taxes | $ | (20 | ) | $ | -- | $ | (11,839 | ) | $ | -- | |||||||
| RECONCILIATION OF NON-GAAP BILLINGS TO REVENUE | ||||||||||||||
| (Unaudited, in thousands) | ||||||||||||||
| Three Months Ended |
Year Ended |
|||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||
| GAAP revenue | $ | 184,696 | $ | 184,774 | $ | 714,114 | $ | 622,967 | ||||||
| Add change in deferred revenue | 37,098 | 72,131 | 126,518 | 174,455 | ||||||||||
| Subtotal | 221,794 | 256,905 | 840,632 | 797,422 | ||||||||||
| Less iSIGHT & Invotas deferred revenue assumed | -- | -- | (21,087 | ) | -- | |||||||||
| Non-GAAP billings | $ | 221,794 | $ | 256,905 | $ | 819,545 | $ | 797,422 | ||||||
| BILLINGS BREAKOUT | ||||||||||||
| (Unaudited, in thousands) | ||||||||||||
| Three Months Ended |
Year Ended |
|||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||
| Product billings | $ | 33,489 | $ | 66,379 | $ | 153,946 | $ | 212,233 | ||||
| Product subscription billings | 113,588 | 108,701 | 386,037 | 327,372 | ||||||||
| Product billings and product subscription billings | 147,077 | 175,080 | 539,983 | 539,605 | ||||||||
| Support and maintenance billings | 38,500 | 47,790 | 143,964 | 137,447 | ||||||||
| Professional services billings | 36,217 | 34,035 | 135,598 | 120,370 | ||||||||
| Non-GAAP billings | $ | 221,794 | $ | 256,905 | $ | 819,545 | $ | 797,422 | ||||
| REVENUE BREAKOUT | ||||||||||||
| (Unaudited, in thousands) | ||||||||||||
| Three Months Ended |
Year Ended |
|||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||
| Product revenue | $ | 33,586 | $ | 66,598 | $ | 151,926 | $ | 216,632 | ||||
| Product subscription revenue | 85,576 | 59,825 | 316,986 | 205,303 | ||||||||
| Product revenue and product subscription revenue | 119,162 | 126,423 | 468,912 | 421,935 | ||||||||
| Support and maintenance revenue | 33,170 | 26,042 | 123,341 | 89,800 | ||||||||
| Professional services revenue | 32,364 | 32,309 | 121,861 | 111,232 | ||||||||
| Total revenue | $ | 184,696 | $ | 184,774 | $ | 714,114 | $ | 622,967 | ||||
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