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Oct. 29, 2019, 4:12 p.m. EDT

FireEye sales beat expectations but earnings slip, stock dips in late trading

Security-software company continues transition from products to cloud-based platform approach

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By Jeremy C. Owens, MarketWatch


Reuters
FireEye’s adjusted earnings fell to 2 cents a share from 6 cents a share a year ago.

FireEye Inc. reported increased quarterly sales and billings Tuesday afternoon, but profit slipped and shares fell more than 3% in late trading.

The security-software company reported third-quarter losses of $65.5 million, or 31 cents a share, on revenue of $225.9 million, with sales rising from $211.7 million a year ago. After adjusting for stock-based compensation, $6.5 million in restructuring costs and other effects, FireEye reported earnings of 2 cents a share, down from 6 cents a share a year ago. The company also said it had billings — which reflect future business under contract that is not yet on the balance sheet — of $248.6 million, up from $219.3 million a year ago.

Analysts on average expected FireEye to report adjusted earnings of a penny a share on revenue of $219.9 million, with billings of $247.3 million, according to FactSet. Those estimates increased slightly after FireEye told analysts at an event Oct. 8 that revenue was expected to come in at the high end or above its previously stated range of $217 million to $221 million, and billings would be within the stated range of $245 million to $255 million.

FireEye /zigman2/quotes/204730283/composite FEYE -0.67%  shares gained 5% the day after announcing those preliminary third-quarter results, but fell 4.7% to $15.48 on Tuesday ahead of the results, for a market capitalization of $3.3 billion. In immediate after-hours trading following their release, the stock fell to less than $15. Overall, shares have declined 5.7% in the past year, as the S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.91%   has increased 15.1%.

/zigman2/quotes/204730283/composite FEYE 16.26, -0.11, -0.67%

FireEye continues to morph its business from one focused on selling security products to one that collects recurring revenue for its software and services. Revenue for the quarter was 52.2% from product and related sales, but Chief Executive Kevin Mandia wants that to fall to less than 30% in the long term, according to his presentation to analysts earlier this month.

“We continued to execute on our long-term plan to transform FireEye from our origins as a network-security product vendor to comprehensive security-platform company,” Mandia said in prepared remarks Tuesday. “Record third-quarter billings for our platform, cloud subscription and managed services as well as professional services categories demonstrate our progress.”

FireEye will host a conference call with executives at 2 p.m. Pacific time.

/zigman2/quotes/204730283/composite
US : U.S.: Nasdaq
$ 16.26
-0.11 -0.67%
Volume: 1.47M
Dec. 6, 2019 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$3.52 billion
Rev. per Employee
$259,672
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/zigman2/quotes/210599714/realtime
US : S&P US
3,145.91
+28.48 +0.91%
Volume: 1.70B
Dec. 6, 2019 5:07p
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Jeremy Owens is MarketWatch’s technology editor and San Francisco bureau chief. You can follow him on Twitter @jowens510.

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