FireEye Reports Strong First Quarter Results as Growth of Platform Billings Accelerates
"Our first quarter billings exceeded the high end of our guidance range, driven by demand for our threat intelligence, cloud-based Email Threat Protection, and
"Our ability to reduce the risk, mask the complexity and lower the total cost of ownership of cyber security for our customers positions us at the intersection of the powerful trends driving change in our industry. We continue to make the strategic investments in our intelligence-led threat management platform and international infrastructure necessary to take advantage of this growing opportunity. At the same time, we remain committed to accelerating our progress on the path to profitability," added DeWalt.
First Quarter 2016 Financial Results
- Revenue of
$168.0 million , an increase of 34 percent from the first quarter of 2015. - Billings of
$186.0 million , an increase of 23 percent from the first quarter of 2015.1 - GAAP operating margin of negative 93 percent, compared to negative 106 percent in the first quarter of 2015.
- Non-GAAP operating margin of negative 44 percent, compared to negative 57 percent in the first quarter of 2015.1
- GAAP net loss per share of
$0.98 , compared to a GAAP net loss per share of$0.88 in the first quarter of 2015. - Non-GAAP net loss per share of
$0.47 , compared to a non-GAAP net loss per share of$0.48 in the first quarter of 2015.1 - Cash flow from operations of negative
$22.5 million , compared to cash flow from operations of negative$3.2 million in the first quarter of 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."
"We delivered year-over-year improvement in non-GAAP operating margins and non-GAAP net loss per share for the fifth consecutive quarter," said
Second Quarter and Updated 2016 Outlook
- Total revenue in the range of
$178 to$185 million . - Non-GAAP billings in the range of
$200 to$215 million . - Non-GAAP operating margin of approximately negative 31 to negative 33 percent of revenue.
- Non-GAAP net loss per share of
$0.38 to$0.40 .
Non-GAAP net loss per share for the second quarter assumes interest expense of approximately
For 2016,
- Total revenue in the range of
$780 to$810 million . - Non-GAAP billings in the range of
$975 to$1,055 million . - Non-GAAP operating margin in the range of negative 22 to negative 24 percent of revenue.
- Non-GAAP net loss per share of
$1.20 to$1.27 . - Positive cash flow from operations in the range of
$70 to$80 million . - Capital expenditures on property and equipment of approximately
$35 million .
Non-GAAP net loss per share for 2016 assumes interest expense of
Guidance for non-GAAP financial measures excludes stock based compensation, amortization of intangible assets, acquisition-related expenses, restructuring charges, 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.
Threat Management Platform Enhanced with Security Orchestration and New Product Features
In a separate press release, the company announced the launch of FireEye Security Orchestrator to act as the connected tissue both across the FireEye Platform but also for the customer's broader IT infrastructure. Along with this ability to connect disparate customer solutions, the company also announced the launch of further enhanced detection and response features including the ability to detect targeted email attacks that do not use malware, guided investigations capabilities to enable understaffed security teams to investigate incidents more effectively and high availability features that enable more organizations to deploy
The FireEye Threat Management Platform combines advanced detection, investigation and response technologies, real-time threat intelligence and leading security expertise in products and services to reduce the business risks of cyber-attacks on the network, at the endpoint and in the cloud. Threat intelligence derived from machine learning, incident response and a global network of researchers is orchestrated across the Threat Management Platform to detect new attacks quickly and reduce response times across multiple attack vectors. Advanced analytics and forensics capabilities, backed up by human expertise, complement virtual machine-based detection in an adaptive framework that lowers complexity of security operations and total cost of ownership while enabling customers to manage risks more effectively.
Management Succession Announced
Additionally, the company announced the implementation of its senior management succession plan.
Additionally,
Conference Call Information
Forward-Looking Statements
This press release contains forward-looking statements, including statements related to future revenue, non-GAAP billings, non-GAAP operating margin, interest expense, provision for income taxes, non-GAAP net loss per share, weighted average shares outstanding, operating cash flow, and capital expenditures on property and equipment in the section entitled "Second Quarter and Updated 2016 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
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 operating margin, net loss and net loss per share.
Non-GAAP net loss and net loss per share in the first 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
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© 2016
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||
(Unaudited, in thousands) | |||||||||||
2016 | 2015 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 175,113 | $ | 402,102 | |||||||
Short-term investments | 746,027 | 767,775 | |||||||||
Accounts receivable, net | 141,247 | 172,752 | |||||||||
Inventories | 10,778 | 13,747 | |||||||||
Prepaid expenses and other current assets | 35,078 | 30,883 | |||||||||
Total current assets | 1,108,243 | 1,387,259 | |||||||||
Property and equipment, net | 81,324 | 78,368 | |||||||||
974,184 | 750,288 | ||||||||||
Intangible assets, net | 290,595 | 214,560 | |||||||||
Deposits and other long-term assets | 12,084 | 10,998 | |||||||||
Total assets | $ | 2,466,430 | $ | 2,441,473 | |||||||
Liabilities and Stockholders' Equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 37,716 | $ | 43,650 | |||||||
Accrued and other current liabilities | 36,082 | 29,820 | |||||||||
Accrued compensation | 105,893 | 79,294 | |||||||||
Deferred revenue, current portion | 329,095 | 305,169 | |||||||||
Total current liabilities | 508,786 | 457,933 | |||||||||
Convertible senior notes, net | 714,978 | 706,198 | |||||||||
Deferred revenue, non-current portion | 236,987 | 221,829 | |||||||||
Other long-term liabilities | 9,298 | 11,141 | |||||||||
Total liabilities | 1,470,049 | 1,397,101 | |||||||||
Stockholders' equity: | |||||||||||
Common stock | 17 | 16 | |||||||||
Additional paid-in capital | 2,512,269 | 2,403,088 | |||||||||
(150,000 | ) | (150,000 | ) | ||||||||
Accumulated other comprehensive loss | (62 | ) | (2,225 | ) | |||||||
Accumulated deficit | (1,365,843 | ) | (1,206,507 | ) | |||||||
Total stockholders' equity | 996,381 | 1,044,372 | |||||||||
Total liabilities and stockholders' equity | $ | 2,466,430 | $ | 2,441,473 | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||
(Unaudited, in thousands, except per share amounts) | ||||||||||
Three Months Ended | ||||||||||
2016 | 2015 | |||||||||
Revenue: | ||||||||||
Product | $ | 33,707 | $ | 40,237 | ||||||
Subscription and services | 134,259 | 85,133 | ||||||||
Total revenue | 167,966 | 125,370 | ||||||||
Cost of revenue: (1)(2) | ||||||||||
Product | 17,133 | 15,200 | ||||||||
Subscription and services | 54,297 | 36,851 | ||||||||
Total cost of revenue | 71,430 | 52,051 | ||||||||
Total gross profit | 96,536 | 73,319 | ||||||||
Operating expenses:(1)(2) | ||||||||||
Research and development | 85,983 | 65,605 | ||||||||
Sales and marketing | 123,028 | 107,595 | ||||||||
General and administrative (3) | 42,256 | 32,607 | ||||||||
Restructuring Charges (4) | 1,670 | - | ||||||||
Total operating expenses | 252,937 | 205,807 | ||||||||
Operating loss | (156,401 | ) | (132,488 | ) | ||||||
Other expense, net (5) | (9,529 | ) | (499 | ) | ||||||
Loss before income taxes | (165,930 | ) | (132,987 | ) | ||||||
Provision for (benefit from) income taxes (6) | (10,030 | ) | 977 | |||||||
Net loss attributable to common stockholders | $ | (155,900 | ) | $ | (133,964 | ) | ||||
Net loss per share attributable to common stockholders, basic and diluted | $ | (0.98 | ) | $ | (0.88 | ) | ||||
Weighted average shares used in per share calculations, basic and diluted | 158,781 | 151,651 | ||||||||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||||||||
(Unaudited, in thousands) | ||||||||||||
Three Months Ended | ||||||||||||
2016 | 2015 | |||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
Net loss | $ | (155,900 | ) | $ | (133,964 | ) | ||||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||||||
Depreciation and amortization | 30,503 | 26,581 | ||||||||||
Stock-based compensation expense | 64,239 | 49,875 | ||||||||||
Non-cash interest expense related to convertible senior notes | 8,780 | - | ||||||||||
Deferred income taxes | (11,053 | ) | 82 | |||||||||
Other | 938 | 509 | ||||||||||
Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in business combinations: | ||||||||||||
Accounts receivable | 43,144 | 32,736 | ||||||||||
Inventories | 2,325 | (2,554 | ) | |||||||||
Prepaid expenses and other assets | (2,152 | ) | 127 | |||||||||
Accounts payable | (3,391 | ) | (4,219 | ) | ||||||||
Accrued liabilities | 902 | 2,068 | ||||||||||
Accrued transaction costs of acquiree | (7,727 | ) | - | |||||||||
Accrued compensation | (8,989 | ) | (2,675 | ) | ||||||||
Deferred revenue | 17,997 | 26,221 | ||||||||||
Other long-term liabilities | (2,132 | ) | 1,997 | |||||||||
Net cash provided by (used in) operating activities | (22,516 | ) | (3,216 | ) | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
Purchase of property and equipment and demonstration units | (14,257 | ) | (12,669 | ) | ||||||||
Purchase of short-term investments | (88,805 | ) | (39,857 | ) | ||||||||
Maturities of short-term investments | 111,319 | 34,655 | ||||||||||
Acquisition of business, net of cash acquired | (204,926 | ) | - | |||||||||
Lease deposits | (678 | ) | (370 | ) | ||||||||
Net cash used in investing activities | (197,347 | ) | (18,241 | ) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
Repayment of assumed debt from acquired business | (8,842 | ) | - | |||||||||
Payment of shares withheld for taxes | (1,124 | ) | - | |||||||||
Proceeds from exercise of equity awards | 2,840 | 11,870 | ||||||||||
Net cash provided by financing activities | (7,126 | ) | 11,870 | |||||||||
Net change in cash and cash equivalents | (226,989 | ) | (9,587 | ) | ||||||||
Cash and cash equivalents, beginning of year | 402,102 | 146,363 | ||||||||||
Cash and cash equivalents, end of year | $ | 175,113 | $ | 136,776 | ||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | |||||||||
(Unaudited, in thousands, except per share amounts) | |||||||||
Three Months Ended | |||||||||
2016 | 2015 | ||||||||
GAAP operating loss | $ | (156,401 | ) | $ | (132,488 | ) | |||
Stock-based compensation expense (1) | 64,067 | 49,875 | |||||||
Amortization of intangible assets (2) | 15,165 | 11,766 | |||||||
Acquisition related expenses (3) | 2,413 | - | |||||||
Restructuring charges (4) | 1,670 | - | |||||||
Non-GAAP operating loss | $ | (73,086 | ) | $ | (70,847 | ) | |||
GAAP operating margin | -93 | % | -106 | % | |||||
Stock-based compensation expense (1) | 38 | % | 40 | % | |||||
Amortization of intangible assets (2) | 9 | % | 9 | % | |||||
Acquisition related expenses (3) | 1 | % | 0 | % | |||||
Restructuring charges (4) | 1 | % | 0 | % | |||||
Non-GAAP operating margin | -44 | % | -57 | % | |||||
GAAP net loss | $ | (155,900 | ) | $ | (133,964 | ) | |||
Stock-based compensation expense (1) | 64,067 | 49,875 | |||||||
Amortization of intangible assets (2) | 15,165 | 11,766 | |||||||
Acquisition related expenses (3) | 2,413 | - | |||||||
Restructuring charges (4) | 1,670 | - | |||||||
Non-cash interest expense related to convertible senior notes (5) | 8,780 | - | |||||||
Non-recurring benefit from income taxes (6) | (11,282 | ) | - | ||||||
Non-GAAP net loss | $ | (75,087 | ) | $ | (72,323 | ) | |||
GAAP net loss per common share, basic and diluted | $ | (0.98 | ) | $ | (0.88 | ) | |||
Stock-based compensation expense (1) | $ | 0.40 | 0.33 | ||||||
Amortization of intangible assets (2) | $ | 0.10 | 0.08 | ||||||
Acquisition related expenses (3) | $ | 0.01 | - | ||||||
Restructuring charges (4) | $ | 0.01 | - | ||||||
Non-cash interest expense related to convertible senior notes (5) | $ | 0.06 | - | ||||||
Non-recurring benefit from income taxes (6) | $ | (0.07 | ) | - | |||||
Non-GAAP net loss per common share, basic and diluted | $ | (0.47 | ) | $ | (0.48 | ) | |||
Weighted average shares used in per share calculations for GAAP and Non-GAAP, basic and diluted | 158,781 | 151,651 | |||||||
(1) includes stock-based compensation expense as follows: | |||||||||
Cost of product revenue | $ | 667 | $ | 268 | |||||
Cost of subscription and services revenue | 9,601 | 6,378 | |||||||
Research and development | 24,430 | 16,035 | |||||||
Sales and marketing | 16,154 | 16,454 | |||||||
General and administrative | 13,215 | 10,740 | |||||||
Total stock-based compensation expense | $ | 64,067 | $ | 49,875 | |||||
(2) includes amortization of intangible assets as follows: | |||||||||
Cost of product revenue | $ | 3,064 | $ | 3,064 | |||||
Cost of subscription and services revenue | 7,751 | 5,475 | |||||||
Sales and marketing | 4,219 | 3,227 | |||||||
Research and development | 131 | - | |||||||
Total amortization of intangible assets | $ | 15,165 | $ | 11,766 | |||||
(3) includes acquisition related expenses as follows: | |||||||||
General and administrative | $ | 2,413 | $ | - | |||||
(4) includes restructuring charges as follows: | |||||||||
Restructuring charges | $ | 1,670 | $ | - | |||||
(5) Includes non-cash interest expense related to convertible senior notes as follows: | |||||||||
Other expense, net | $ | 8,780 | $ | - | |||||
(6) includes discrete benefit from income taxes as follows: | |||||||||
Provision for (benefit from) income taxes | $ | (11,282 | ) | $ | - | ||||
RECONCILIATION OF NON-GAAP BILLINGS TO REVENUE | ||||||||
(Unaudited, in thousands) | ||||||||
Three Months Ended | ||||||||
2016 | 2015 | |||||||
GAAP revenue | $ | 167,966 | $ | 125,370 | ||||
Add change in deferred revenue | 39,084 | 26,221 | ||||||
Subtotal | $ | 207,050 | $ | 151,591 | ||||
Less iSIGHT & Invotas deferred revenue assumed | (21,087 | ) | - | |||||
Non-GAAP billings | $ | 185,963 | $ | 151,591 | ||||
BILLINGS BREAKOUT | ||||||||
(Unaudited, in thousands) | ||||||||
Three Months Ended | ||||||||
2016 | 2015 | |||||||
Product billings | $ | 33,370 | $ | 38,234 | ||||
Product subscription billings | 88,884 | 63,736 | ||||||
Product billings and product subscription billings | 122,254 | 101,970 | ||||||
Support and maintenance billings | 31,346 | 22,842 | ||||||
Professional services billings | 32,363 | 26,779 | ||||||
Non-GAAP billings | $ | 185,963 | $ | 151,591 | ||||
REVENUE BREAKOUT | ||||||||
(Unaudited, in thousands) | ||||||||
Three Months Ended | ||||||||
2016 | 2015 | |||||||
Product revenue | $ | 33,707 | $ | 40,237 | ||||
Product subscription revenue | 74,163 | 43,376 | ||||||
Product revenue and product subscription revenue | 107,870 | 83,613 | ||||||
Support and maintenance revenue | 28,413 | 19,084 | ||||||
Professional services revenue | 31,683 | 22,673 | ||||||
Total revenue | $ | 167,966 | $ | 125,370 | ||||
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