Cyber security firm FireEye’s revenue tops estimates, shares rise

FireEye CEO Kevin Mandia is seen during an interview in Rome
FireEye Chief Executive Officer (CEO) Kevin Mandia is seen during an interview in Rome, Italy June 8, 2017. Picture taken June 8, 2017. REUTERS/Tony Gentile

August 2, 2017

(Reuters) – Internet security company FireEye Inc <FEYE.O> reported better-than-expected quarterly revenue as the company benefited from its shift to a subscription and service-based model, sending its shares up 6.5 percent in after-market trading on Tuesday.

FireEye, whose traditional business centered around the sale of hardware boxes, said subscription and services business rose 14.9 percent to $154.3 million in the second quarter.

Analysts on average had expected revenue of $150.7 million, according to financial data and analytics firm FactSet.

FireEye also raised its full-year revenue forecast to between $734 million and $746 million from between $724 million and $736 million it previously forecast.

Analysts on average were expecting revenue of $730.6 million, according to Thomson Reuters I/B/E/S.

FireEye, which is yet to report a profit since going public in 2013, is targeting adjusted quarterly profit and positive cash flow by the end of 2017.

“The second quarter is another validation that we are on track there,” Chief Financial Officer Frank Verdecanna told Reuters.

FireEye, which has probed some of the biggest cyber attacks to date, including the 2013 holiday attack on Target Corp and the attack on Sony Pictures Entertainment, in May last year named Kevin Mandia as its chief executive officer.

The company said net loss attributable to shareholders nearly halved to $70.7 million, or 40 cents per share, in the three months ended June 30.

On an adjusted basis, FireEye’s loss narrowed to 4 cents per share, much smaller than analysts’ estimate of 12 cents.

Large-scale cyber crimes have jumped in 2017 with instances of ransomware such as “WannaCry” and “Petya” underscoring concerns that businesses have failed to secure their networks from increasingly aggressive hackers.

Highly publicized cyber attacks are good for business for most cyber security firms, even though experts say such attacks underscore the industry’s failings.

“The breach environment is very strong…we’re still the go to people for all the large breaches,” Verdecanna said.

FireEye, which provides web, email and malware security to businesses and governments, said total revenue rose 6 percent to $185.5 million in the second quarter.

Analysts on average had expected revenue of $176.4 million.

The company’s billings, a closely watched indicator of future business, fell 12.4 percent to $172 million, but were above Street’s estimated billings of $167.5 million, according to FactSet.

Shares of FireEye, which have risen about 23 percent this year, were trading at $15.65 after the bell on Tuesday.

(Reporting by Ismail Shakil and Aishwarya Venugopal in Bengaluru; Editing by Maju Samuel and Sriraj Kalluvila)