A month has gone by since the last earnings report for Mandiant . Shares have added about 15.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Mandiant due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Mandiant Posts Lower-Than-Expected Q4 Loss
Mandiant posted a non-GAAP loss of 10 cents per share, a penny lower than the year-ago quarter’s loss of 11 cents. The quarterly loss per share was also narrower than the Zacks Consensus Estimate of a loss of 13 cents.
Mandiant’s fourth-quarter revenues of $133 million surpassed the Zacks Consensus Estimate of $131.6 million. Also, the top line registered a 21% increase from the year-ago quarter’s revenues of $110 million.
This was Mandiant’s second quarterly result following the divestiture of its FireEye Product business. On Oct 8, the company completed the sale of its FireEye Product business to a consortium led by the private equity firm, Symphony Technology Group, in an all-cash transaction worth $1.2 billion.
Pursuant to the asset divestiture, MNDT classified the FireEye Product business as discontinued operations and the business hasn’t been included in fourth-quarter financial results from continuing operations.
Top-Line Details
Revenues from Mandiant’s platform, cloud subscription and managed services division increased 18% year over year to $67 million. Its professional services segment’s revenues surged 23% year over year to $66 million.
Mandiant’s fourth-quarter 2021 billings grew 54% year over year, primarily driven by strong billings registered in the platform, cloud subscription and managed services and professional services.
Platform, cloud subscription and managed services billings surged 83%, driven by solid demand and record billings across all Mandiant Advantage platform modules and Managed Defense solution. Professional services billings increased 25%.
Annualized recurring revenues increased 23% year over year to $279 million. The company witnessed a significant increase in the contract length, which reached 22.1 months from 24.9 months in the year-ago quarter.
During the quarter, Mandiant added 225 new logo customers, up 2% from the year-ago quarter level. It closed 32 transactions worth more than $1 million, higher than the year-ago quarter’s tally of 28 deals.
Operating Performance
Non-GAAP gross margin expanded 400 basis points (bps) year over year and 300 bps sequentially to 63% in the fourth quarter. Non-GAAP gross margin of the platform, cloud subscription and managed services division increased to 72% from 57% in the year-ago quarter and 70% from the third quarter of 2021.
The upsurge in the platform, cloud subscription and managed services segment’s gross margin was mainly driven by the increased scale and higher subscription business. Also, reduced allocations of IT and facility into the division’s cost of goods sold as a result of reimbursements from the Transition Services Agreement (“TSA”) to support the FireEye products business supported gross margin growth.
Professional services’ non-GAAP gross margin improved to 54% in the fourth quarter from 49% in the year-ago quarter and 51% in the third quarter. The increase was primarily driven by reduced allocations of IT and facility into the division’s cost of goods sold as a result of reimbursements from the TSA.
The company reported non-GAAP operating margin of negative 17%, a significant improvement from negative 22% in the year-ago quarter and negative 27% in the third quarter. The improvement in the operating margin was mainly driven by the benefits from higher revenues and the start of TSA reimbursements, which partially offset some of IT facilities and general & administrative expenses.
Balance Sheet & Cash Flow
Mandiant exited the fourth quarter with cash and cash equivalents and short-term investments of $2.19 billion, which were significantly higher than $1.23 billion as of Sep 30, 2021.
During the quarter, the company used $10 million of cash for operational activities.
Guidance
Mandiant provided the first-quarter and full-year 2022 guidance. For the first quarter, management anticipates revenues and annualized recurring revenues in the range of $128-$131 million and $291-$297 million, respectively.
The company projects non-GAAP gross margin of 59-60%. Non-GAAP operating margin is estimated between negative 22% and negative 24%. MNDT expects non-GAAP loss per share from continuing operations in the band of 13-15 cents.
For the full year 2022, management anticipates revenues and annualized recurring revenues in the range of $555-$565 million and $360-$366 million, respectively.
The company projects non-GAAP gross margin of 61.5-62.5%. Non-GAAP operating margin is estimated between negative 13% and negative 14%. Mandiant expects non-GAAP loss per share from continuing operations in the band of 36-38 cents.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Mandiant has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Mandiant has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Mandiant (MNDT) Up 15.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Mandiant . Shares have added about 15.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Mandiant due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Mandiant Posts Lower-Than-Expected Q4 Loss
Mandiant posted a non-GAAP loss of 10 cents per share, a penny lower than the year-ago quarter’s loss of 11 cents. The quarterly loss per share was also narrower than the Zacks Consensus Estimate of a loss of 13 cents.
Mandiant’s fourth-quarter revenues of $133 million surpassed the Zacks Consensus Estimate of $131.6 million. Also, the top line registered a 21% increase from the year-ago quarter’s revenues of $110 million.
This was Mandiant’s second quarterly result following the divestiture of its FireEye Product business. On Oct 8, the company completed the sale of its FireEye Product business to a consortium led by the private equity firm, Symphony Technology Group, in an all-cash transaction worth $1.2 billion.
Pursuant to the asset divestiture, MNDT classified the FireEye Product business as discontinued operations and the business hasn’t been included in fourth-quarter financial results from continuing operations.
Top-Line Details
Revenues from Mandiant’s platform, cloud subscription and managed services division increased 18% year over year to $67 million. Its professional services segment’s revenues surged 23% year over year to $66 million.
Mandiant’s fourth-quarter 2021 billings grew 54% year over year, primarily driven by strong billings registered in the platform, cloud subscription and managed services and professional services.
Platform, cloud subscription and managed services billings surged 83%, driven by solid demand and record billings across all Mandiant Advantage platform modules and Managed Defense solution. Professional services billings increased 25%.
Annualized recurring revenues increased 23% year over year to $279 million. The company witnessed a significant increase in the contract length, which reached 22.1 months from 24.9 months in the year-ago quarter.
During the quarter, Mandiant added 225 new logo customers, up 2% from the year-ago quarter level. It closed 32 transactions worth more than $1 million, higher than the year-ago quarter’s tally of 28 deals.
Operating Performance
Non-GAAP gross margin expanded 400 basis points (bps) year over year and 300 bps sequentially to 63% in the fourth quarter. Non-GAAP gross margin of the platform, cloud subscription and managed services division increased to 72% from 57% in the year-ago quarter and 70% from the third quarter of 2021.
The upsurge in the platform, cloud subscription and managed services segment’s gross margin was mainly driven by the increased scale and higher subscription business. Also, reduced allocations of IT and facility into the division’s cost of goods sold as a result of reimbursements from the Transition Services Agreement (“TSA”) to support the FireEye products business supported gross margin growth.
Professional services’ non-GAAP gross margin improved to 54% in the fourth quarter from 49% in the year-ago quarter and 51% in the third quarter. The increase was primarily driven by reduced allocations of IT and facility into the division’s cost of goods sold as a result of reimbursements from the TSA.
The company reported non-GAAP operating margin of negative 17%, a significant improvement from negative 22% in the year-ago quarter and negative 27% in the third quarter. The improvement in the operating margin was mainly driven by the benefits from higher revenues and the start of TSA reimbursements, which partially offset some of IT facilities and general & administrative expenses.
Balance Sheet & Cash Flow
Mandiant exited the fourth quarter with cash and cash equivalents and short-term investments of $2.19 billion, which were significantly higher than $1.23 billion as of Sep 30, 2021.
During the quarter, the company used $10 million of cash for operational activities.
Guidance
Mandiant provided the first-quarter and full-year 2022 guidance. For the first quarter, management anticipates revenues and annualized recurring revenues in the range of $128-$131 million and $291-$297 million, respectively.
The company projects non-GAAP gross margin of 59-60%. Non-GAAP operating margin is estimated between negative 22% and negative 24%. MNDT expects non-GAAP loss per share from continuing operations in the band of 13-15 cents.
For the full year 2022, management anticipates revenues and annualized recurring revenues in the range of $555-$565 million and $360-$366 million, respectively.
The company projects non-GAAP gross margin of 61.5-62.5%. Non-GAAP operating margin is estimated between negative 13% and negative 14%. Mandiant expects non-GAAP loss per share from continuing operations in the band of 36-38 cents.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Mandiant has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions has been net zero. Notably, Mandiant has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.