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FireEye (FEYE) to Post Q1 Earnings: What's in the Offing?

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FireEye (FEYE - Free Report) is set to report first-quarter 2020 results on Apr 28.

For the quarter, the company anticipates revenues between $222 million and $226 million. The Zacks Consensus Estimate for revenues currently stands at $220.46 million, implying 4.71% growth from the year-ago quarter’s reported figure.

The company also projects non-GAAP loss between 3 cents and 5 cents per share. The midpoint of 4 cents matches the consensus mark, suggesting a 33.3% year-over-year decline.

Notably, the company’s earnings beat the Zacks Consensus Estimate twice in the trailing four quarters, missed once and matched in the remaining quarter, the average negative surprise being 6.25%.

Let’s see how things are shaping up for the upcoming announcement.

FireEye, Inc. Price and EPS Surprise

FireEye, Inc. Price and EPS Surprise

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

Factors at Play

FireEye’s upcoming quarterly results are expected to have benefited from continued solid demand for its products, given the healthy environment of the global security market.

Platform, cloud subscription and managed service revenues are expected to have grown 20% or more, year over year. Also, service revenues are likely to have grown at a mid-to-high-teens growth rate, as projected by the company in its last earnings call.

Moreover, strong traction in Mandiant Professional Services revenues is expected to have aided the first-quarter results. Notably, Mandiant Services engagements, powered by the Verodin platform, have been gaining strong adoption.

Further, continued momentum in Helix, Intel, and cloud e-mail and endpoint is expected to have been a tailwind. In the last reported quarter, FireEye added several capabilities to the Helix platform. This is likely to have attracted customers in the to-be-reported quarter.

However, supply-chain disruptions due to the coronavirus-induced lockdown globally might have hurt its first-quarter performance.

Moreover, in its last earnings call, the company had projected billings for the first quarter to be $165-$175 million, lower than revenues. Hence, a sequential decline in current deferred revenues is expected. The Zacks Consensus Estimate for billings stands at $172 million, indicating a 5.5% year-over-year increase.

Also, FireEye expects seasonal growth in operating expenses to have resulted in an operating loss of 3-5%.

Additionally, due to lower billings and higher expenses compared with the first quarter of 2019, the company projects operating cash outflow of $5 million at worst and cash flow of $5 million at best for the first quarter

FireEye also mentioned earlier that product and related revenues might decline 10-15% as the last of the 2015 appliances were amortized in fourth-quarter 2019.

What Our Model Says

The proven Zacks model does not conclusively predict an earnings beat for FireEye this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

FireEye has a Zacks Rank #3 and an Earnings ESP of -12.5%.

Stocks to Consider

Here are some stocks you may consider, as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:

Baidu, Inc. (BIDU - Free Report) has an Earnings ESP of +10.09% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Apple Inc. (AAPL - Free Report) has an Earnings ESP of +0.51% and a Zacks Rank #3.

Cirrus Logic, Inc. (CRUS - Free Report) has an Earnings ESP of +1.7% and a Zacks Rank of 3, currently.

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