Exhibit 99.1
FireEye Reports Record Revenue for Fourth Quarter and Full Year 2017
| |
| • | Q4 Revenue of $202.3 million, an increase of 10 percent from the fourth quarter of 2016 |
| |
| • | Q4 Billings of $242.2 million, an increase of 9 percent from the fourth quarter of 2016 |
| |
| • | Q4 Cash flow generated by operations was $33.6 million, an increase of 384 percent from the fourth quarter of 2016 |
| |
| • | Deferred revenue of $670.7 million, an increase of $39.9 million from the end of the third quarter of 2017 and an increase of $17.2 million from the end of 2016 |
| |
| • | Strong Q4 performance against all key financial metrics and for all major product groups and geographic regions, including record sales for Endpoint Security, Helix, iSIGHT threat intelligence and Mandiant services |
MILPITAS, Calif. – February 8, 2018 – FireEye, Inc. (NASDAQ: FEYE), the intelligence-led security company, today announced financial results for the fourth quarter and fiscal year ended December 31, 2017.
“We achieved strong results across all key financial metrics in the fourth quarter and delivered against our year-long commitment of billings and revenue growth, non-GAAP operating profitability, and positive operating and free cash flow by the fourth quarter,” said Kevin Mandia, FireEye chief executive officer. “We delivered year-over-year and sequential growth in every major product group and geographic region, and we closed a record number of transactions greater than $1 million."
“We are building FireEye for the long-term, and we begin 2018 with a solid foundation for future growth and increased profitability," added Mandia. “The combination of our expertise on the front lines, our threat intelligence, and our machine-generated cyber attack data gives us greater visibility into the threat environment than any other security company. I believe this is a sustainable competitive advantage for us. We leverage our unique insights in our continuous innovation cycle that allows us to rapidly adapt our solutions, deliver expertise on demand, and remain relevant for our customers as the threat landscape evolves.”
Fourth Quarter 2017 Financial Results
| |
| • | Revenue of $202.3 million, an increase of 10 percent from the fourth quarter of 2016, and above the guidance range of $190 million to $196 million. |
| |
| • | Billings of $242.2 million, an increase of 9 percent from the fourth quarter of 2016, and above the guidance range of $210 million to $230 million.1 |
| |
| • | GAAP gross margin of 66 percent, compared to 65 percent in the fourth quarter of 2016. |
| |
| • | Non-GAAP gross margin of 75 percent, compared to 74 percent in the fourth quarter of 2016, and consistent with guidance of approximately 75 percent.1 |
| |
| • | GAAP operating margin of negative 33 percent, compared to negative 27 percent in the fourth quarter of 2016. |
| |
| • | Non-GAAP operating margin of positive 1 percent, compared to negative 1 percent in the fourth quarter of 2016, and consistent with the guidance range of approximately negative 1 percent to positive 1 percent.1 |
| |
| • | GAAP net loss per share of $0.42, compared to a GAAP net loss per share of $0.37 in the fourth quarter of 2016. |
| |
| • | Non-GAAP net income per share of $0.01, compared to a non-GAAP net loss per share of $0.03 in the fourth quarter of 2016, and better than the guidance range of non-GAAP net loss per share of $0.00 to $0.03.1 |
| |
| • | Cash flow generated by operations was $33.6 million, compared to cash flow generated by operations of $6.9 million in the fourth quarter of 2016, and better than the guidance range of $16 million to $25 million. Cash flow generated by operations in the fourth quarter of 2017 was reduced by a payment of $12.5 million in net legal settlement costs. |
2017 Financial Results
| |
| • | Revenue of $751.1 million, an increase of 5 percent from 2016, and above the guidance range of $739 million to $745 million. |
| |
| • | Billings of $768.3 million, a decrease of 6 percent from 2016, and above the guidance range of $736 million to $756 million.1 |
| |
| • | GAAP gross margin of 64 percent, compared to 62 percent in 2016. |
| |
| • | Non-GAAP gross margin of 74 percent, compared to 73 percent in 2016.1 |
| |
| • | GAAP operating margin of negative 34 percent, compared to negative 62 percent in 2016. |
| |
| • | Non-GAAP operating margin of negative 3 percent, compared to negative 21 percent in 2016.1 |
| |
| • | GAAP net loss per share of $1.71, compared to a GAAP net loss per share of $2.94 in 2016. |
| |
| • | Non-GAAP net loss per share of $0.16, compared to a non-GAAP net loss per share of $0.99 in 2016, and equal to the low end of the non-GAAP net loss per share guidance range of $0.16 to $0.19.1 |
| |
| • | Cash flow generated by operations was $17.6 million, compared to cash flow used in operations of $14.6 million in 2016, and better than the guidance range for cash flow generated by operations of $1 million to $10 million. Cash flow generated by operations in 2017 was reduced by a payment of $12.5 million in net legal settlement costs. |
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 is also included under the heading “Non-GAAP Financial Measures.”
First Quarter and 2018 Outlook
FireEye provides guidance based on current market conditions and expectations. First quarter and full year 2018 guidance ranges reflect the adoption of ASC 606.
For the first quarter of 2018, FireEye currently expects
| |
| • | Total revenue in the range of $192 million to $197 million. |
| |
| • | Billings in the range of $165 million to $175 million. |
| |
| • | Non-GAAP gross margin of approximately 74 percent. |
| |
| • | Non-GAAP operating margin of approximately negative 2 percent to negative 4 percent. |
| |
| • | Non-GAAP net loss per share of $0.03 to $0.06. |
| |
| • | Cash flow generated by operations between zero dollars and negative $10 million.
|
Non-GAAP net loss per share for the first quarter assumes cash interest expense of approximately $3 million associated with the company’s convertible senior notes, provision for income taxes of between $1.0 million and $1.5 million, and weighted average shares outstanding of approximately 186 million.
For 2018, FireEye currently expects
| |
| • | Revenue in the range of $815 million to $825 million. |
| |
| • | Billings in the range of $810 million to $830 million. |
| |
| • | Non-GAAP operating margin between 1 percent and 2 percent. |
| |
| • | Non-GAAP net income per share between $0.00 and $0.04. |
| |
| • | Positive cash flow generated by operations of $45 million to $55 million. |
| |
| • | Capital expenditures between $35 million and $40 million, including approximately $12 million in capital expenditures associated with the relocation of the company's headquarters to a new building in January 2018. |
Non-GAAP net income per share for 2018 assumes cash interest expense of approximately $12.1 million, paid semi-annually in June and December, associated with the company's convertible senior notes, provision for income taxes of between $5.0 million and $6.0 million, and diluted weighted average shares outstanding of approximately 197 million.
Guidance for non-GAAP financial measures excludes stock based compensation, amortization of intangible assets, and non-cash interest expense related to the company’s convertible senior notes. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis due to the uncertainty regarding, and the potential variability of, the amounts of stock-based compensation expense, amortization of intangible assets, and non-recurring expenses that may be incurred in the future. Stock-based compensation expense is impacted by the company’s future hiring and retention needs, as well as the future fair market value of the company’s common stock, all of which is difficult to predict and subject to constant change. The actual amount of stock-based compensation in the first quarter of 2018 and full year 2018 will have a significant impact on the company’s GAAP operating margin and net loss per share. Further, amortization of intangible assets, as well as other non-recurring expenses, if any, will also impact results. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort.
2018 Analyst Day Scheduled for March 1st
The company has scheduled its 2018 Analyst Day for March 1, 2018, with management presentations beginning at 8:30 a.m. Pacific time. A live audio webcast of the call, as well as related multi-media content, will be available on the Investor Relations section of the company's website at http://investors.fireeye.com/events.cfm. An archived version of the webcast will be available at the same website shortly after the conclusion of the live event.
Conference Call Information
FireEye will host a conference call today, February 8, 2018, at 5 p.m. Eastern time (2 p.m. Pacific time) to discuss its fourth quarter and fiscal 2017 financial results and the company’s outlook for the first quarter and full year 2018. 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. An archived version of the webcast will be available at the same website shortly after the conclusion of the live event.
Forward-Looking Statements
This press release contains forward-looking statements, including statements related to future financial results for the first quarter and full year 2018, including revenue, billings, non-GAAP gross margin, non-GAAP operating margin, cash flows generated by operations, interest expense, provision for income taxes, non-GAAP net income (loss) per share, basic and diluted weighted average shares outstanding and capital expenditures in the section entitled “First Quarter and 2018 Outlook” above, as well as statements related to future growth, profitability, innovation, competitive advantages, and adapting as the threat landscape evolves.
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 customer demand and adoption of FireEye’s products and services; real or perceived defects, errors or vulnerabilities in FireEye's products or services; any delay in FireEye’s release of products or services; FireEye's ability to react to trends and challenges in its business and the markets in which it operates; FireEye's ability to anticipate market needs or develop new or enhanced products and services to meet those needs; FireEye’s ability to hire and retain critical executives and key employees; FireEye’s ability to attract new and retain existing customers and train its sales force; the budgeting cycles, seasonal buying patterns and length of FireEye’s sales cycle; risks associated with new offerings; sales and marketing execution risks; the failure to achieve expected synergies and efficiencies of operations between FireEye and its acquired companies; the ability of FireEye and its acquired companies to successfully integrate their respective market opportunities, technologies, products, personnel and operations; the ability of FireEye and its partners to execute their strategies, plans, objectives and expected investments with respect to FireEye’s partnerships; and general market, political, economic, and business conditions, as well as those risks and uncertainties included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in FireEye’s Form 10-Q filed with the Securities and Exchange Commission on November 2, 2017, 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, except as required by law. Any future product, service, feature, or related specification that may be referenced in this release is for informational purposes only and is not a commitment to deliver any offering, technology or enhancement. FireEye reserves the right to modify future product or service plans at any time.
Non-GAAP Financial Measures
In this release FireEye has provided 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, and 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. FireEye excludes deferred revenue assumed in connection with acquisitions from the billings calculation. The company considers billings to be a useful metric for management and investors because billings drive deferred revenue balances, which are an important indicator of the company’s future revenues. Revenue recognized from deferred revenue represents 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 income, operating margin, net income (loss), net income (loss) per share, and free cash flow. FireEye defines non-GAAP gross margin as total gross profit excluding stock-based compensation expense, amortization of intangible assets, and, as applicable, other special or non-recurring items, divided by total revenue. FireEye defines non-GAAP operating income (loss) as operating income (loss) excluding stock-based compensation expense, amortization of intangible assets, legal settlement costs, acquisition-related expenses, change in fair value of contingent earn-out liability, restructuring charges, and other special or non-recurring items. FireEye defines non-GAAP operating margin as non-GAAP operating income divided by total revenue. FireEye defines non-GAAP net income (loss) as net income (loss) excluding stock-based compensation expense, amortization of intangible assets, legal settlement costs, acquisition-related expenses, change in fair value of contingent earn-out liability, restructuring charges, other special or non-recurring items, non-cash interest expense related to the company’s convertible senior notes, and discrete tax benefits. FireEye defines non-GAAP net income per share as non-GAAP net income divided by diluted weighted average shares outstanding. Diluted weighted average shares used to calculate non-GAAP net income per share excludes shares issuable upon conversion of the company's senior convertible notes that are anti-dilutive. FireEye defines non-GAAP net loss per share as non-GAAP net loss divided by weighted average shares outstanding, which excludes stock options, restricted stock units, performance stock units, and shares issuable upon conversion of the company's senior convertible notes that are anti-dilutive. FireEye defines free cash flow as cash flow generated by operations less purchases of property and equipment.
Non-GAAP net income and net income per share in the fourth quarter of 2017 excluded stock-based compensation expense, amortization of intangible assets, acquisition-related expenses, non-cash interest expense related to the convertible senior notes issued in June 2015, and legal settlement costs. Diluted weighted average shares outstanding used to calculate non-GAAP net income per share excluded shares issuable upon conversion of convertible senior notes that are anti-dilutive.
Non-GAAP net loss and net loss per share for the fourth quarter of 2016 excluded stock-based compensation expense, amortization of intangible assets, change in fair value of contingent earn-out liability, non-cash interest expense related to the convertible senior notes issued in June 2015, and discrete benefit from income taxes. Additionally, weighted average shares outstanding used to calculate non-GAAP loss per share excluded stock
options, restricted stock units, performance stock units, and shares issuable upon conversion of senior convertible notes that are anti-dilutive.
Non-GAAP net loss and net loss per share for 2017 excluded stock-based compensation expense, amortization of intangible assets, acquisition-related expenses, change in the fair value of contingent earn-out liability, non-cash interest expense related to the convertible senior notes issued in June 2015, and legal settlement costs. Weighted average shares outstanding used to calculate non-GAAP net loss per share excluded stock options, restricted stock units, performance stock units, and shares issuable upon conversion of convertible senior notes that are anti-dilutive.
Non-GAAP net loss and net loss per share for 2016 excluded stock-based compensation expense, amortization of intangible assets, acquisition-related expenses, change in fair value of contingent earn-out liability, restructuring costs, non-cash interest expense related to the convertible senior notes issued in June 2015, and discrete benefit from income taxes. Additionally, weighted average shares outstanding used to calculate non-GAAP loss per share excluded stock options, restricted stock units, performance stock units, and shares issuable upon conversion of convertible senior notes that are anti-dilutive.
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, non-cash interest expense related to the company’s convertible senior notes, change in fair value of contingent earn-out liability, restructuring charges, and other non-recurring and discrete items so that management and investors can compare the company's core business operating results, 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. Stock-based compensation is an important part of FireEye employees' overall compensation. Second, 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 or non-operating items such as acquisition related expenses, legal settlement costs, amortization of intangible assets, non-cash interest expense related to the company’s convertible senior notes, change in fair value of contingent earn-out liability, restructuring charges, and discrete tax benefits, may differ from the components excluded by peer companies when they report their non-GAAP results of operations. FireEye compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP financial measures and evaluating non-GAAP financial measures together with their nearest GAAP equivalents.
About FireEye, Inc.
FireEye is the intelligence-led security company. Working as a seamless, scalable extension of customer security operations, FireEye offers a single platform that blends innovative security technologies, nation-state grade threat intelligence, and world-renowned Mandiant® consulting. With this approach, FireEye eliminates the complexity and burden of cyber security for organizations struggling to prepare for, prevent, and respond to cyber attacks. FireEye has over 6,600 customers across 67 countries, including more than 45 percent of the Forbes Global 2000.
© 2018 FireEye, Inc. All rights reserved. FireEye, Mandiant, Helix and iSIGHT 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.
Media contact:
Dan Wire
FireEye, Inc.
415-895-2101
dan.wire@fireeye.com
Investor contact:
Kate Patterson
FireEye, Inc.
408-321-4957
kate.patterson@fireeye.com
Source: FireEye
FireEye, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands) |
| | | | | | | |
| | December 31,
2017 | | December 31,
2016 |
| | | | |
| Assets | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 180,891 |
| | $ | 223,667 |
|
| Short-term investments | 715,911 |
| | 712,058 |
|
| Accounts receivable, net | 140,049 |
| | 121,150 |
|
| Inventories | 5,746 |
| | 5,955 |
|
| Prepaid expenses and other current assets | 34,541 |
| | 25,081 |
|
| Total current assets | 1,077,138 |
| | 1,087,911 |
|
| Property and equipment, net | 71,357 |
| | 61,852 |
|
| Goodwill | 984,661 |
| | 978,260 |
|
| Intangible assets, net | 187,388 |
| | 244,032 |
|
| Deposits and other long-term assets | 11,537 |
| | 10,910 |
|
| Total assets | $ | 2,332,081 |
| | $ | 2,382,965 |
|
| Liabilities and Stockholders' Equity | | | |
| Current liabilities: | | | |
| Accounts payable | $ | 35,684 |
| | $ | 20,269 |
|
| Accrued and other current liabilities | 19,569 |
| | 22,997 |
|
| Accrued compensation | 59,588 |
| | 96,004 |
|
| Deferred revenue, current portion | 443,064 |
| | 397,118 |
|
| Total current liabilities | 557,905 |
| | 536,388 |
|
| Convertible senior notes, net | 779,578 |
| | 741,980 |
|
| Deferred revenue, non-current portion | 227,680 |
| | 256,398 |
|
| Other long-term liabilities | 22,102 |
| | 7,087 |
|
| Total liabilities | 1,587,265 |
| | 1,541,853 |
|
| Stockholders' equity: | | | |
| Common stock | 19 |
| | 17 |
|
| Additional paid-in capital | 2,891,441 |
| | 2,682,909 |
|
| Treasury stock | (150,000 | ) | | (150,000 | ) |
| Accumulated other comprehensive loss | (2,881 | ) | | (1,742 | ) |
| Accumulated deficit | (1,993,763 | ) | | (1,690,072 | ) |
| Total stockholders’ equity | 744,816 |
| | 841,112 |
|
| Total liabilities and stockholders' equity | $ | 2,332,081 |
| | $ | 2,382,965 |
|
FireEye, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share amounts) |
| | | | | | | | | | | | | | | |
| | Three Months Ended December 31, | | Year Ended December 31, |
| | 2017 | | 2016 | | 2017 | | 2016 |
| Revenue: | | | | | | | |
| Product | $ | 38,278 |
| | $ | 33,586 |
| | $ | 123,696 |
| | $ | 151,926 |
|
| Subscription and services | 163,995 |
| | 151,110 |
| | 627,390 |
| | 562,188 |
|
| Total revenue | 202,273 |
| | 184,696 |
| | 751,086 |
| | 714,114 |
|
| Cost of revenue: (1)(2) | | | | | | | |
| Product | 15,465 |
| | 15,391 |
| | 56,807 |
| | 65,158 |
|
| Subscription and services | 53,907 |
| | 48,567 |
| | 212,080 |
| | 206,710 |
|
| Total cost of revenue | 69,372 |
| | 63,958 |
| | 268,887 |
| | 271,868 |
|
| Total gross profit | 132,901 |
| | 120,738 |
| | 482,199 |
| | 442,246 |
|
| Operating expenses: (1)(2) | | | | | | | |
| Research and development | 59,858 |
| | 54,574 |
| | 243,273 |
| | 279,594 |
|
| Sales and marketing | 98,524 |
| | 84,310 |
| | 371,935 |
| | 439,499 |
|
| General and administrative (3)(4)(5) | 40,306 |
| | 30,914 |
| | 125,597 |
| | 139,839 |
|
| Restructuring charges (6) | — |
| | — |
| | — |
| | 27,630 |
|
| Total operating expenses | 198,688 |
| | 169,798 |
| | 740,805 |
| | 886,562 |
|
| Operating loss | (65,787 | ) | | (49,060 | ) | | (258,606 | ) | | (444,316 | ) |
| Other expense, net (7) | (9,992 | ) | | (12,733 | ) | | (40,453 | ) | | (44,534 | ) |
| Loss before income taxes | (75,779 | ) | | (61,793 | ) | | (299,059 | ) | | (488,850 | ) |
| Provision for (benefit from) income taxes (8) | 1,247 |
| | (257 | ) | | 4,632 |
| | (8,721 | ) |
| Net loss attributable to common stockholders | $ | (77,026 | ) | | $ | (61,536 | ) | | $ | (303,691 | ) | | $ | (480,129 | ) |
| Net loss per share attributable to common stockholders, basic and diluted | $ | (0.42 | ) | | $ | (0.37 | ) | | $ | (1.71 | ) | | $ | (2.94 | ) |
| Weighted average shares used in per share calculations, basic and diluted | 182,281 |
| | 167,228 |
| | 177,757 |
| | 163,211 |
|
FireEye, Inc.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited, in thousands)
|
| | | | | | | |
| | Year Ended December 31, |
| | 2017 | | 2016 |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | |
| Net loss | $ | (303,691 | ) | | $ | (480,129 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | | | |
| Depreciation and amortization | 103,417 |
| | 119,267 |
|
| Stock-based compensation | 166,336 |
| | 199,066 |
|
| Non-cash interest expense related to convertible senior notes | 37,598 |
| | 35,782 |
|
| Change in fair value of contingent earn-out liability | (54 | ) | | 2,356 |
|
| Deferred income taxes | (1,287 | ) | | (11,926 | ) |
| Other | 7,217 |
| | 9,836 |
|
| Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in business acquisitions: | | | |
| Accounts receivable | (20,749 | ) | | 61,785 |
|
| Inventories | (3,333 | ) | | 1,415 |
|
| Prepaid expenses and other assets | (4,736 | ) | | 9,344 |
|
| Accounts payable | 6,040 |
| | (19,093 | ) |
| Accrued liabilities | (3,659 | ) | | (11,154 | ) |
| Accrued transaction costs of acquiree | — |
| | (7,727 | ) |
| Accrued compensation | 2,565 |
| | (24,621 | ) |
| Deferred revenue | 17,227 |
| | 105,431 |
|
| Other long-term liabilities | 14,749 |
| | (4,217 | ) |
| Net cash provided by (used in) operating activities | 17,640 |
| | (14,585 | ) |
| CASH FLOWS FROM INVESTING ACTIVITIES: | | | |
| Purchases of property and equipment and demonstration units | (43,779 | ) | | (36,314 | ) |
| Purchases of short-term investments | (409,358 | ) | | (507,073 | ) |
| Proceeds from maturities of short-term investments | 397,483 |
| | 554,358 |
|
| Proceeds from sales of short-term investments | 3,620 |
| | 4,507 |
|
| Business acquisitions, net of cash acquired | (4,300 | ) | | (204,926 | ) |
| Purchase of investment in private company | (2,500 | ) | | — |
|
| Lease deposits | (489 | ) | | (248 | ) |
| Net cash used in investing activities | (59,323 | ) | | (189,696 | ) |
| CASH FLOWS FROM FINANCING ACTIVITIES: | | | |
| Repayment of debt of acquired business | — |
| | (8,842 | ) |
| Payments for contingent earn-outs | (38,928 | ) | | (112 | ) |
| Payment related to shares withheld for taxes | (1,408 | ) | | (1,124 | ) |
| Proceeds from employee stock purchase plan | 20,094 |
| | 22,080 |
|
| Proceeds from exercise of equity awards | 19,149 |
| | 13,844 |
|
| Net cash provided by (used in) financing activities | (1,093 | ) | | 25,846 |
|
| Net change in cash and cash equivalents | (42,776 | ) | | (178,435 | ) |
| Cash and cash equivalents, beginning of period | 223,667 |
| | 402,102 |
|
| Cash and cash equivalents, end of period | $ | 180,891 |
| | $ | 223,667 |
|
FireEye, Inc.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited, in thousands, except per share amounts) |
| | | | | | | | | | | | | | | |
| | Three Months Ended December 31, | | Year Ended December 31, |
| | 2017 | | 2016 | | 2017 | | 2016 |
| GAAP operating loss | $ | (65,787 | ) | | $ | (49,060 | ) | | $ | (258,606 | ) | | $ | (444,316 | ) |
| Stock-based compensation expense (1) | 40,842 |
| | 30,949 |
| | 166,336 |
| | 197,751 |
|
| Amortization of intangible assets (2) | 14,954 |
| | 16,079 |
| | 59,314 |
| | 64,028 |
|
| Legal settlement costs (5) | 12,500 |
| | — |
| | 12,500 |
| | — |
|
| Acquisition related expenses (3) | 440 |
| | — |
| | 440 |
| | 2,413 |
|
| Change in fair value of contingent earn-out liability (4) | — |
| | 600 |
| | (54 | ) | | 2,356 |
|
| Restructuring charges (6) | — |
| | — |
| | — |
| | 27,630 |
|
| Non-GAAP operating income (loss) | $ | 2,949 |
| | $ | (1,432 | ) | | $ | (20,070 | ) | | $ | (150,138 | ) |
| GAAP gross margin | 66 | % | | 65 | % | | 64 | % | | 62 | % |
| Stock-based compensation expense (1) | 4 | % | | 3 | % | | 5 | % | | 5 | % |
| Amortization of intangible assets (2) | 5 | % | | 6 | % | | 5 | % | | 6 | % |
| Non-GAAP gross margin | 75 | % | | 74 | % | | 74 | % | | 73 | % |
| GAAP operating margin | (33 | )% | | (27 | )% | | (34 | )% | | (62 | )% |
| Stock-based compensation expense (1) | 21 | % | | 17 | % | | 21 | % | | 28 | % |
| Amortization of intangible assets (2) | 7 | % | | 9 | % | | 8 | % | | 9 | % |
| Legal settlement costs (5) | 6 | % | | — | % | | 2 | % | | — | % |
| Acquisition related expenses (3) | — | % | | — | % | | — | % | | — | % |
| Change in fair value of contingent earn-out liability (4) | — | % | | — | % | | — | % | | — | % |
| Restructuring charges (6) | — | % | | — | % | | — | % | | 4 | % |
| Non-GAAP operating margin | 1.0 | % | | (1 | )% | | (3 | )% | | (21 | )% |
| GAAP net loss | $ | (77,026 | ) | | $ | (61,536 | ) | | $ | (303,691 | ) | | $ | (480,129 | ) |
| Stock-based compensation expense (1) | 40,842 |
| | 30,949 |
| | 166,336 |
| | 197,751 |
|
| Amortization of intangible assets (2) | 14,954 |
| | 16,079 |
| | 59,314 |
| | 64,028 |
|
| Legal settlement costs (5) | 12,500 |
| | — |
| | 12,500 |
| | — |
|
| Acquisition related expenses (3) | 440 |
| | — |
| | 440 |
| | 2,413 |
|
| Change in fair value of contingent earn-out liability (4) | — |
| | 600 |
| | (54 | ) | | 2,356 |
|
| Restructuring charges (6) | — |
| | — |
| | — |
| | 27,630 |
|
| Non-cash interest expense related to convertible senior notes (7) | 9,575 |
| | 9,112 |
| | 37,598 |
| | 35,782 |
|
| Adjustment to provision (benefit) from income taxes (8) | — |
| | (20 | ) | | — |
| | (11,839 | ) |
| Non-GAAP net income (loss) | $ | 1,285 |
| | $ | (4,816 | ) | | $ | (27,557 | ) | | $ | (162,008 | ) |
| GAAP net loss per common share, basic and diluted | $ | (0.42 | ) | | $ | (0.37 | ) | | $ | (1.71 | ) | | $ | (2.94 | ) |
| Stock-based compensation expense (1) | 0.22 |
| | 0.19 |
| | 0.94 |
| | 1.21 |
|
| Amortization of intangible assets (2) | 0.08 |
| | 0.10 |
| | 0.33 |
| | 0.39 |
|
| Legal settlement costs (5) | 0.08 |
| | — |
| | 0.07 |
| | — |
|
| Acquisition related expenses (3) | — |
| | — |
| | — |
| | 0.01 |
|
| Change in fair value of contingent earn-out liability (4) | — |
| | — |
| | — |
| | 0.02 |
|
| Restructuring charges (6) | — |
| | — |
| | — |
| | 0.17 |
|
| Non-cash interest expense related to convertible senior notes (7) | 0.05 |
| | 0.05 |
| | 0.21 |
| | 0.22 |
|
|
| | | | | | | | | | | | | | | |
| | Three Months Ended December 31, | | Year Ended December 31, |
| | 2017 | | 2016 | | 2017 | | 2016 |
| Adjustment to provision for (benefit from) income taxes (8) | — |
| | — |
| | — |
| | (0.07 | ) |
| Non-GAAP net income (loss) per common share, basic | $ | 0.01 |
| | $ | (0.03 | ) | | $ | (0.16 | ) | | $ | (0.99 | ) |
| Non-GAAP net income (loss) per common share, diluted | $ | 0.01 |
| | $ | (0.03 | ) | | $ | (0.16 | ) | | $ | (0.99 | ) |
| Weighted average shares used in per share calculation for GAAP, basic and diluted | 182,281 |
| | 167,228 |
| | 177,757 |
| | 163,211 |
|
| Weighted average shares used in per share calculation for Non-GAAP, basic | 182,281 |
| | 167,228 |
| | 177,757 |
| | 163,211 |
|
| Weighted average shares used in per share calculation for Non-GAAP, diluted | 189,974 |
| | 167,228 |
| | 177,757 |
| | 163,211 |
|
| | | | | | | | |
| (1) Includes stock-based compensation expense as follows: | | | | | | | |
| Cost of product revenue | $ | 541 |
| | $ | 295 |
| | $ | 2,141 |
| | $ | 2,092 |
|
| Cost of subscription and services revenue | 8,378 |
| | 4,798 |
| | 30,515 |
| | 29,811 |
|
| Research and development expense | 13,738 |
| | 9,878 |
| | 56,720 |
| | 64,755 |
|
| Sales and marketing expense | 10,858 |
| | 10,075 |
| | 46,766 |
| | 57,750 |
|
| General and administrative expense | 7,327 |
| | 5,903 |
| | 30,194 |
| | 43,343 |
|
| Total stock-based compensation expense | $ | 40,842 |
| | $ | 30,949 |
| | $ | 166,336 |
| | $ | 197,751 |
|
| | | | | | | | |
| (2) Includes amortization of intangible assets as follows: | | | | | | | |
| Cost of product revenue | $ | 2,781 |
| | $ | 3,064 |
| | $ | 11,187 |
| | $ | 12,256 |
|
| Cost of subscription and services revenue | 7,375 |
| | 8,406 |
| | 29,500 |
| | 33,176 |
|
| Research and development expense | 257 |
| | 162 |
| | 744 |
| | 618 |
|
| Sales and marketing expense | 4,541 |
| | 4,447 |
| | 17,883 |
| | 17,978 |
|
| Total amortization of intangible assets | $ | 14,954 |
| | $ | 16,079 |
| | $ | 59,314 |
| | $ | 64,028 |
|
| | | | | | | | |
| (3) Includes acquisition related expenses as follows: | | | | | | | |
| General and administrative expense | $ | 440 |
| | $ | — |
| | $ | 440 |
| | $ | 2,413 |
|
| | | | | | | | |
| (4) Includes change in fair value of contingent earn-out liability as follows: | | | | | | | |
| General and administrative expense | $ | — |
| | $ | 600 |
| | $ | (54 | ) | | $ | 2,356 |
|
| | | | | | | | |
| (5) Includes legal settlement costs as follows: | | | | | | | |
| General and administrative expense | $ | 12,500 |
| | $ | — |
| | $ | 12,500 |
| | $ | — |
|
| | | | | | | | |
| (6) Includes restructuring charges as follows: | | | | | | | |
| Restructuring charges | $ | — |
| | $ | — |
| | $ | — |
| | $ | 27,630 |
|
| | | | | | | | |
| (7) Includes non-cash interest expense related to convertible senior notes as follows: | | | | | | | |
| Other expense, net | $ | 9,575 |
| | $ | 9,112 |
| | $ | 37,598 |
| | $ | 35,782 |
|
| | | | | | | | |
| (8) Includes income tax effect of non-GAAP adjustments as follows: | | | | | | | |
| Provision for (benefit from) income taxes | $ | — |
| | $ | (20 | ) | | $ | — |
| | $ | (11,839 | ) |
FireEye, Inc.
RECONCILIATION OF NON-GAAP BILLINGS TO REVENUE
(Unaudited, in thousands)
|
| | | | | | | | | | | | | | | |
| | Three Months Ended December 31, | | Year Ended December 31, |
| | 2017 | | 2016 | | 2017 | | 2016 |
| GAAP revenue | $ | 202,273 |
| | $ | 184,696 |
| | $ | 751,086 |
| | $ | 714,114 |
|
| Add change in deferred revenue | 39,931 |
| | 37,098 |
| | 17,228 |
| | 126,518 |
|
| Subtotal | 242,204 |
| | 221,794 |
| | 768,314 |
| | 840,632 |
|
| Less iSIGHT & Invotas deferred revenue assumed | — |
| | — |
| | — |
| | (21,087 | ) |
| Non-GAAP billings | $ | 242,204 |
| | $ | 221,794 |
| | $ | 768,314 |
| | $ | 819,545 |
|
FireEye, Inc.
BILLINGS BREAKOUT
(Unaudited, in thousands)
|
| | | | | | | | | | | | | | | |
| | Three Months Ended December 31, | | Year Ended December 31, |
| | 2017 | | 2016 | | 2017 | | 2016 |
| Product billings | $ | 39,448 |
| | $ | 33,489 |
| | $ | 124,010 |
| | $ | 153,946 |
|
| Product subscription billings | 116,978 |
| | 113,588 |
| | 361,403 |
| | 386,037 |
|
| Support and maintenance billings | 44,518 |
| | 38,500 |
| | 133,862 |
| | 143,964 |
|
| Professional services billings | 41,260 |
| | 36,217 |
| | 149,039 |
| | 135,598 |
|
| Non-GAAP billings | $ | 242,204 |
| | $ | 221,794 |
| | $ | 768,314 |
| | $ | 819,545 |
|
FireEye, Inc.
REVENUE BREAKOUT
(Unaudited, in thousands)
|
| | | | | | | | | | | | | | | |
| | Three Months Ended December 31, | | Year Ended December 31, |
| | 2017 | | 2016 | | 2017 | | 2016 |
| Product revenue | $ | 38,278 |
| | $ | 33,586 |
| | $ | 123,696 |
| | $ | 151,926 |
|
| Product subscription revenue | 93,379 |
| | 85,576 |
| | 356,682 |
| | 316,986 |
|
| Support and maintenance revenue | 36,660 |
| | 33,170 |
| | 139,758 |
| | 123,341 |
|
| Professional services revenue | 33,956 |
| | 32,364 |
| | 130,950 |
| | 121,861 |
|
| Total revenue | $ | 202,273 |
| | $ | 184,696 |
| | $ | 751,086 |
| | $ | 714,114 |
|
