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MILPITAS, CA - Feb 11, 2014 – FireEye, Inc. (NASDAQ: FEYE), the leader at stopping today's advanced cyber attacks, today announced financial results for the fourth quarter and fiscal year 2013. FireEye acquired Mandiant, a leader in advanced endpoint solutions and security incident response, on December 30, 2013. The financial statements for the fourth quarter and fiscal year 2013 consolidate Mandiant's financial results according to purchase accounting rules.
Fourth Quarter 2013 Financial Results
Fiscal Year 2013 Financial Results
1 A reconciliation of GAAP to non-GAAP financial measures is provided in the financial statement tables included in this press release. An explanation of these measures also is included under the heading "Non-GAAP Financial Measures."
"By all measures, the fourth quarter was a strong finish to an extraordinary year for FireEye. During 2013, we nearly doubled our billings and revenue, built a global infrastructure to support our growth, completed our initial public offering, and extended our virtual machine-based security technology with mobile, data center, and small and midsized business solutions," said David DeWalt, FireEye chairman of the board and chief executive officer. "At year-end, we announced our acquisition of Mandiant, a technology alliance partner and a leader in advanced endpoint solutions and incident response services."
"FireEye defined the advanced threat protection category in 2009 with the introduction of virtual-machine based solutions. With the Mandiant acquisition, we have the opportunity to transform the industry again," added DeWalt. "Our complementary technologies and combined product and service offerings accelerate our ability to deliver more effective threat protection at a lower cost in multiple security market segments. Our new MVX-IPS product is the first of several products on our roadmap designed to replace existing signature-based security products."
Recent Business Highlights
Business highlights since the release of third quarter financial results on November 7, 2013 included:
Recent FireEye Threat Prevention Platform Announcements
New products and enhancements to the FireEye Threat Prevention Platform announced since the release of third quarter financial results included:
First Quarter and 2014 Outlook
FireEye provides guidance based on current market conditions and expectations.
For the first quarter of 2014, after a reduction of approximately $3 million in revenue related to purchase accounting adjustments to the assumed amount of Mandiant's deferred revenue, the company expects, on a non-GAAP basis:
Consistent with the preliminary guidance ranges for billings and revenue announced on January 2, 2014, for the full year 2014, the company expects, on a non-GAAP basis:
Guidance for Non-GAAP financial measures excludes stock based compensation, amortization of intangible assets and any discrete tax benefits relating to the Mandiant acquisition. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis.
Conference Call Information
FireEye will host a conference call today, February 11, 2014, at 5:00 PM Eastern Time (2:00 PM Pacific Time) to discuss its financial results. Interested parties may access the conference call by dialing 877-312-5521 (domestic) or 678-894-3048 (international). A live audio webcast of the call, as well as related multi-media content, can be accessed from the Investor Relations section of the company's website at http://investors.fireeye.com. Shortly after the conclusion of the call, an archived version of the webcast will be available at the same website.
This press release contains forward-looking statements, including statements related to future billings, revenue, non-GAAP gross margins, operating expenses as a percent of revenue, weighted average shares outstanding, and non-GAAP loss per share in the section entitled "First Quarter and 2014 Outlook" above, as well as statements related to the general availability of FireEye MVX-IPS and FireEye OS 7.1 and to the company's ability to deliver more effective threat protection at lower cost in security market segments as a result of the Mandiant acquisition.
These forward-looking statements involve risks and uncertainties, as well as assumptions which, if they do not fully materialize or prove incorrect, could cause FireEye's results to differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties that could cause FireEye's results to differ materially from those expressed or implied by such forward-looking statements include market adoption of FireEye's virtual machine-based security platform; FireEye's limited operating history, particularly as a new public company; the failure to achieve expected synergies and efficiencies of operations between FireEye and Mandiant; the ability of FireEye and Mandiant to successfully integrate their respective market opportunities, technology, products, personnel and operations; FireEye's ability to attract and retain new customers and expand and train its sales force; the budgeting cycles, seasonal buying patterns and length of FireEye's sales cycle; risks associated with FireEye's rapid growth; FireEye's limited experience with developing and releasing new products and services; real or perceived defects, errors or vulnerabilities in FireEye's platform; rapidly evolving technological developments in a market that is characterized by rapid changes in technology, customer requirements, industry standards, and frequent new product introductions and improvements; and general market, political, economic, and business conditions, as well as those risks and uncertainties included under the caption "Risk Factors" in FireEye's registration statement filed with the SEC on February 3, 2014 pursuant to the Securities Act of 1933, as amended, which should be read in conjunction with these financial results and is available on the Investor Relations section of FireEye's website at investors.fireeye.com and on the SEC website at www.sec.gov.
All forward-looking statements in this press release are based on information available to the company as of the date hereof, and FireEye does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.
Non-GAAP Financial Measures
FireEye has provided in this release financial information that has not been prepared in accordance with generally accepted accounting principles in the United States (GAAP). These non-GAAP financial measures are not based on any standardized methodology and are not necessarily comparable to similar measures used by other companies. The company uses these non-GAAP financial measures internally in analyzing its financial results and believes that the use of these non-GAAP financial measures is useful to investors as an additional tool to evaluate ongoing operating results and trends in comparing the company's financial results with other companies in its industry, many of which present similar non-GAAP financial measures.
Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable financial information prepared in accordance with GAAP, and should be read only in conjunction with the company's consolidated financial statements prepared in accordance with GAAP. A reconciliation of the company's non-GAAP financial measures to their most directly comparable GAAP measures has been provided in the financial statement tables included in this press release, and investors are encouraged to review the reconciliation.
Billings. FireEye defines billings as revenue recognized plus the change in deferred revenue from the beginning to the end of the period. For the fourth quarter and fiscal year 2013, billings exclude the addition of $16.1 million of Mandiant deferred revenue, as adjusted by purchase accounting. The company considers billings to be a useful metric for management and investors because billings drive deferred revenue, which is an important indicator of the health and visibility of the company's business and represent a significant percentage of quarterly revenue. There are a number of limitations related to the use of billings versus revenue calculated in accordance with GAAP. First, billings include amounts that have not yet been recognized as revenue. Second, FireEye's calculation of billings may be different from other companies in its industry, some of which may not use billings, may calculate billings differently, may have different billing frequencies, or may use other financial measures to evaluate their performance, all of which could reduce the usefulness of billings as a comparative measure. FireEye compensates for these limitations by providing specific information regarding GAAP revenue and evaluating billings together with revenue calculated in accordance with GAAP.
Non-GAAP gross margin, operating loss, net loss and net loss per share. FireEye defines non-GAAP gross margin as total gross profit excluding stock-based compensation expenses, amortization of intangible assets, and, as applicable, other special items divided by total revenue. FireEye defines non-GAAP operating loss as operating loss excluding stock-based compensation expense amortization of intangible assets and acquisition related expenses. FireEye defines non-GAAP net loss as net loss excluding stock-based compensation expense, amortization of intangible assets, change in fair value of preferred stock warrant liability, and, for the fourth quarter of 2013 and fiscal year 2013, acquisition related costs and a discrete tax benefit relating to the Mandiant acquisition. FireEye defines non-GAAP net loss per share as non-GAAP net loss divided by the weighted average shares outstanding. FireEye considers these non-GAAP financial measures to be useful metrics for management and investors because they exclude the effect of stock-based compensation expense, amortization of intangible assets, acquisition related expenses, change in fair value of preferred stock warrant liability and other non-recurring items so that management and investors can compare the company's "core business operating results," meaning its operating performance excluding not only these items, but also, from time to time, discrete charges that are infrequent in nature, over multiple periods.
There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. First, these non-GAAP financial measures exclude stock-based compensation expense. Stock-based compensation expense has been and will continue to be for the foreseeable future a significant recurring expense in the company's business. Second, stock-based compensation is an important part of FireEye employees' overall compensation. Third, the components of the costs that FireEye excludes in its calculation of these non-GAAP financial measures, including not only stock-based compensation but also non-recurring items like acquisition related costs, amortization of intangible assets and change in fair value of preferred stock warrant liability, may differ from the components that its peer companies exclude when they report their non-GAAP results of operations. FireEye compensates for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures and evaluating these non-GAAP financial measures together with their nearest GAAP equivalents.
About FireEye, Inc.
FireEye has invented a purpose-built, virtual machine-based security platform that provides real-time threat protection to enterprises and governments worldwide against the next generation of cyber attacks. These highly sophisticated cyber attacks easily circumvent traditional signature-based defenses, such as next-generation firewalls, IPS, anti-virus, and gateways. The FireEye Threat Prevention Platform provides real-time, dynamic threat protection without the use of signatures to protect an organization across the primary threat vectors and across the different stages of an attack life cycle. The core of the FireEye platform is a virtual execution engine, complemented by dynamic threat intelligence, to identify and block cyber attacks in real time. FireEye has over 1,500 customers across more than 40 countries, including over 100 of the Fortune 500.
© 2014 FireEye, Inc. All rights reserved. FireEye, Dynamic Threat Intelligence and Email Threat Prevention are registered trademarks or trademarks of FireEye, Inc. in the United States and other countries. All other brands, products, or service names are or may be trademarks or service marks of their respective owners.
Vitor De Souza
Source: FireEye, Inc.