FireEye Q4 and Full Year 2017 Results announced: Cybersecurity firm expects revenue of $825 million in 2018

Cybersecurity firm FireEye has announced financial results for the fourth quarter and fiscal year ended December 31, 2017. Company reported revenue of $202.3 million in Q4, which is an increase of 10 percent from the fourth quarter of 2016, and above the guidance range of $190 million to $196 million. On the other hand, in 2017, revenue of $751.1 million was reported, that is an increase of 5 percent from 2016, and above the guidance range of $739 million to $745 million.

“We achieved strong results across all key financial metrics in the fourth quarter and delivered against our year-long commitment of billings and revenue growth, non-GAAP operating profitability, and positive operating and free cash flow by the fourth quarter,” said Kevin Mandia, FireEye chief executive officer. “We delivered year-over-year and sequential growth in every major product group and geographic region, and we closed a record number of transactions greater than $1 million.”

“We are building FireEye for the long-term, and we begin 2018 with a solid foundation for future growth and increased profitability,” added Mandia. “The combination of our expertise on the front lines, our threat intelligence, and our machine-generated cyber attack data gives us greater visibility into the threat environment than any other security company. I believe this is a sustainable competitive advantage for us. We leverage our unique insights in our continuous innovation cycle that allows us to rapidly adapt our solutions, deliver expertise on demand, and remain relevant for our customers as the threat landscape evolves.”

Also Read: Kevin Mandia, CEO, FireEye Interview

FireEye Fourth Quarter 2017 Financial Results

• Revenue of $202.3 million, an increase of 10 percent from the fourth quarter of 2016, and above the guidance range of $190 million to $196 million.
• Billings of $242.2 million, an increase of 9 percent from the fourth quarter of 2016, and above the guidance range of $210 million to $230 million.
• GAAP gross margin of 66 percent, compared to 65 percent in the fourth quarter of 2016.
• Non-GAAP gross margin of 75 percent, compared to 74 percent in the fourth quarter of 2016, and consistent with guidance of approximately 75 percent.
• GAAP operating margin of negative 33 percent, compared to negative 27 percent in the fourth quarter of 2016.
• Non-GAAP operating margin of positive 1 percent, compared to negative 1 percent in the fourth quarter of 2016, and consistent with the guidance range of approximately negative 1 percent to positive 1 percent.
• GAAP net loss per share of $0.42, compared to a GAAP net loss per share of $0.37 in the fourth quarter of 2016.
• Non-GAAP net income per share of $0.01, compared to a non-GAAP net loss per share of $0.03 in the fourth quarter of 2016, and better than the guidance range of non-GAAP net loss per share of $0.00 to $0.03.
• Cash flow generated by operations was $33.6 million, compared to cash flow generated by operations of $6.9 million in the fourth quarter of 2016, and better than the guidance range of $16 million to $25 million. Cash flow generated by operations in the fourth quarter of 2017 was reduced by a payment of $12.5 million in net legal settlement costs.

FireEye 2017 Financial Results

• Revenue of $751.1 million, an increase of 5 percent from 2016, and above the guidance range of $739 million to $745 million.
• Billings of $768.3 million, a decrease of 6 percent from 2016, and above the guidance range of $736 million to $756 million.
• GAAP gross margin of 64 percent, compared to 62 percent in 2016.
• Non-GAAP gross margin of 74 percent, compared to 73 percent in 2016.
• GAAP operating margin of negative 34 percent, compared to negative 62 percent in 2016.
• Non-GAAP operating margin of negative 3 percent, compared to negative 21 percent in 2016.¹
• GAAP net loss per share of $1.71, compared to a GAAP net loss per share of $2.94 in 2016.
• Non-GAAP net loss per share of $0.16, compared to a non-GAAP net loss per share of $0.99 in 2016, and equal to the low end of the non-GAAP net loss per share guidance range of $0.16 to $0.19.
• Cash flow generated by operations was $17.6 million, compared to cash flow used in operations of $14.6 million in 2016, and better than the guidance range for cash flow generated by operations of $1 million to $10 million. Cash flow generated by operations in 2017 was reduced by a payment of $12.5 million in net legal settlement costs.

FireEye First Quarter and 2018 Outlook

FireEye provides guidance based on current market conditions and expectations. First quarter and full year 2018 guidance ranges reflect the adoption of ASC 606. For the first quarter of 2018, FireEye currently expects

• Total revenue in the range of $192 million to $197 million.
• Billings in the range of $165 million to $175 million.
• Non-GAAP gross margin of approximately 74 percent.
• Non-GAAP operating margin of approximately negative 2 percent to negative 4 percent.
• Non-GAAP net loss per share of $0.03 to $0.06.
• Cash flow generated by operations between zero dollars and negative $10 million.

Non-GAAP net loss per share for the first quarter assumes cash interest expense of approximately $3 million associated with the company's convertible senior notes, provision for income taxes of between $1.0 million and $1.5 million, and weighted average shares outstanding of approximately 186 million.

For 2018, FireEye currently expects

• Revenue in the range of $815 million to $825 million.
• Billings in the range of $810 million to $830 million.
• Non-GAAP operating margin between 1 percent and 2 percent.
• Non-GAAP net income per share between $0.00 and $0.04.
• Positive cash flow generated by operations of $45 million to $55 million.
• Capital expenditures between $35 million and $40 million, including approximately $12 million in capital expenditures associated with the relocation of the company's headquarters to a new building in January 2018.

Non-GAAP net income per share for 2018 assumes cash interest expense of approximately $12.1 million, paid semi-annually in June and December, associated with the company's convertible senior notes, provision for income taxes of between $5.0 million and $6.0 million, and diluted weighted average shares outstanding of approximately 197 million.