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FireEye Inc. reported first-quarter 2020 non-GAAP loss of 2 cents per share, which was narrower than the Zacks Consensus Estimate of 4 cents. The bottom line also improved from the prior-year quarter’s loss of 3 cents per share.
Revenues totaled $225 million, which increased 7% year over year and outpaced the consensus mark of $220 million.
This year over year upside was led by strong growth in Platform, Cloud Subscription, Managed Services and Mandiant Consulting services. Moreover, significant momentum in Mandiant Professional Services benefited the top line.
Segment-wise, product, subscription and support revenues increased 2.5% year over year to $174.1 million and revenues from professional services rose 24.6% year over year to $50.6 million.
However, FireEye’s on-premise product and related business revenues decreased 11% year over year, reflecting a decline in the opening current deferred revenue balance for the segment. This stemmed from a fall in appliance hardware sales in 2016 and 2017 but is still realized due to the ASC 606 revenue accounting standards.
Quarterly billings of $170 million decreased 7% year over year. Disruptions related to the coronavirus pandemic negatively impacted billings by $10-$15 million.
The company expects the pandemic to affect contract length significantly, going forward.
Mandiant Professional Services performed well in the first quarter. Revenues from this segment grew 25% from the year-ago quarter.
Operating Results
Non-GAAP gross margin contracted 300 basis points (bps) year over year to 7%.
Non-GAAP operating loss was 1%, up 200 bps.
Balance Sheet & Cash Flow
FireEye exited the first quarter with cash and cash equivalents, and short-term investments of approximately $980 million, down from $1.04 billion at the end of the previous quarter.
The company also mentioned that it is positioned comfortably to pay $120 million in convertible debt on Jun 1.
The company’s cash outflow from operations was $24 million against an inflow of $40 million in the fourth quarter of 2019.
Guidance
In the wake of the pandemic, FireEye withdrew its billings and operating cash flow guidance for 2020 and refrained from providing the same for the second quarter.
For second-quarter 2020, FireEye anticipates revenues between $213 million and $217 million. The Zacks Consensus Estimate for revenues currently stands at $221.5 million, implying 4.71% growth from the year-ago quarter’s reported figure.
Also, an operating loss of 2-1% is expected.
A restructuring cost of $10-$15 million is expected in the second quarter.
Non-GAAP loss per share is expected to be 3-1 cents.
For 2020, the company now expects revenues of $880-$900 million, down from the previously guided $935-$945 million. FireEye also expects non-GAAP earnings between 3 cents and 7 cents, much lower than the previously expected range of 20-24 cents per share.
Zacks Rank & Key Picks
The company currently carries a Zacks Rank #3 (Hold).
Long-term earnings growth rate for Zoom, Pixelworks and Avid is currently pegged at 26.56%, 20% and 20%, respectively.
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FireEye (FEYE) Q1 Earnings & Revenues Surpass Estimates
FireEye Inc. reported first-quarter 2020 non-GAAP loss of 2 cents per share, which was narrower than the Zacks Consensus Estimate of 4 cents. The bottom line also improved from the prior-year quarter’s loss of 3 cents per share.
Revenues totaled $225 million, which increased 7% year over year and outpaced the consensus mark of $220 million.
This year over year upside was led by strong growth in Platform, Cloud Subscription, Managed Services and Mandiant Consulting services. Moreover, significant momentum in Mandiant Professional Services benefited the top line.
FireEye, Inc. Price, Consensus and EPS Surprise
FireEye, Inc. price-consensus-eps-surprise-chart | FireEye, Inc. Quote
Quarter Details
Segment-wise, product, subscription and support revenues increased 2.5% year over year to $174.1 million and revenues from professional services rose 24.6% year over year to $50.6 million.
However, FireEye’s on-premise product and related business revenues decreased 11% year over year, reflecting a decline in the opening current deferred revenue balance for the segment. This stemmed from a fall in appliance hardware sales in 2016 and 2017 but is still realized due to the ASC 606 revenue accounting standards.
Quarterly billings of $170 million decreased 7% year over year. Disruptions related to the coronavirus pandemic negatively impacted billings by $10-$15 million.
The company expects the pandemic to affect contract length significantly, going forward.
Mandiant Professional Services performed well in the first quarter. Revenues from this segment grew 25% from the year-ago quarter.
Operating Results
Non-GAAP gross margin contracted 300 basis points (bps) year over year to 7%.
Non-GAAP operating loss was 1%, up 200 bps.
Balance Sheet & Cash Flow
FireEye exited the first quarter with cash and cash equivalents, and short-term investments of approximately $980 million, down from $1.04 billion at the end of the previous quarter.
The company also mentioned that it is positioned comfortably to pay $120 million in convertible debt on Jun 1.
The company’s cash outflow from operations was $24 million against an inflow of $40 million in the fourth quarter of 2019.
Guidance
In the wake of the pandemic, FireEye withdrew its billings and operating cash flow guidance for 2020 and refrained from providing the same for the second quarter.
For second-quarter 2020, FireEye anticipates revenues between $213 million and $217 million. The Zacks Consensus Estimate for revenues currently stands at $221.5 million, implying 4.71% growth from the year-ago quarter’s reported figure.
Also, an operating loss of 2-1% is expected.
A restructuring cost of $10-$15 million is expected in the second quarter.
Non-GAAP loss per share is expected to be 3-1 cents.
For 2020, the company now expects revenues of $880-$900 million, down from the previously guided $935-$945 million. FireEye also expects non-GAAP earnings between 3 cents and 7 cents, much lower than the previously expected range of 20-24 cents per share.
Zacks Rank & Key Picks
The company currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader technology sector are Zoom Video Communications, Inc. (ZM - Free Report) , Pixelworks, Inc. (PXLW - Free Report) and Avid Technology, Inc. , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Zoom, Pixelworks and Avid is currently pegged at 26.56%, 20% and 20%, respectively.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>