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FireEye (FEYE) Q2 Earnings Meet, Revenues Miss Estimates

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FireEye recently posted second-quarter 2021 results, wherein non-GAAP earnings came in at 9 cents per share, in line with the Zacks Consensus Estimate. The company’s bottom line also remained flat, year on year.

Revenues increased 8% year over year to $248 million but marginally the consensus mark of $248.9 million by a whisker. The year-over-year increase was fueled by growth across each of the company’s categories. FireEye’s overall quarterly results also benefited from higher demand for cybersecurity solutions amid the pandemic-induced work-and-learn-from-home trend.

Pursuant to its ongoing agreement to sell the FireEye Products business to a consortium led by Symphony Technology Group, the company has classified the said business unit as discontinued operations. As a result, FireEye also provided condensed consolidated statements of operations excluding the discontinued operations.

Excluding the discontinued operations, FireEye’s revenues increased 17% year over year to $114 million. For the quarter, the company posted non-GAAP loss of 14 cents per share, marginally wider than the year-ago quarter’s loss per share of 13 cents.

FireEye, Inc. Price, Consensus and EPS Surprise

FireEye, Inc. Price, Consensus and EPS Surprise

FireEye, Inc. price-consensus-eps-surprise-chart | FireEye, Inc. Quote

The company added 248 new logo customers during the reported quarter. Of the total customers added, the company closed 47 transactions, valued at more than $1 million each, in the second quarter.

Annualized recurring revenues increased 19% year over year. Quarterly billings recorded a 23% year-on-year rise.

Gross margin contracted 60 basis points year over year to 63.1% for the combined operation.

Moreover, non-GAAP operating margin remained flat year over year at 10%.

Balance Sheet & Cash Flow

FireEye exited the second quarter with cash and cash equivalents, and short-term investments of $1.25 billion were marginally down from $1.3 billion as of Mar 31, 2021.

The company generated an operating cash flow of $44.3 million in the first half of 2021.

Guidance

FireEye provided third-quarter guidance for continuing operations. For the quarter, management anticipates revenues between $118 million and $122 million.

The company projects non-GAAP gross margin of 58-59%. Non-GAAP operating margin is estimated between negative 27% and negative 29%. FireEye expects non-GAAP loss per share from continuing operations in the band of 14-16 cents.

Zacks Rank & Stocks to Consider

FireEye currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector include Microsoft (MSFT - Free Report) , Cadence Design Systems (CDNS - Free Report) and Texas Instruments (TXN - Free Report) , all carrying a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term earnings growth rate for Microsoft, Cadence Design and Texas Instruments is currently pegged at 11.5%, 11.7% and 9.3%, respectively.

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