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FireEye Stock Rose ~15% after 1Q17 Report—How Does 2017 Look?

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FireEye Stock Rose ~15% after 1Q17 Report—How Does 2017 Look? PART 1 OF 15

How FireEye Posted Better-than-Expected Results in 1Q17

Subscriptions drove 1Q17 revenue growth

After FireEye (FEYE) posted its 1Q17 earnings on May 2, 2017, its stock surged ~15%. This came as a welcome surprise to investors who have witnessed FireEye stock’s consistent fall, punctuated by the occasional rise, since 2015. This trend has depressed the company’s valuations.

FireEye posted better-than-expected 1Q17 results on the back of improvement in its Subscription and Services segment and its shift toward the SaaS1 model. FireEye’s Subscription and Services revenues grew 11.7% to $150 million in 1Q17, contributing 86% toward the company’s overall revenues. The segment was responsible for ~3% of the overall growth in FireEye’s 1Q17 revenues.

How FireEye Posted Better-than-Expected Results in 1Q17

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FireEye (FEYE) reported revenues of $173.7 million and a non-GAAP2 loss of $0.09 per share. This report exceeded analysts’ expectations by ~$10.0 million and $0.26, respectively, in 1Q17.

Guidance in billings exceeded analysts’ expectations

In 1Q17, FireEye’s (FEYE) billings stood at $152.4 million. On this front, FireEye exceeded analysts’ expectations of billings in the $130 million–$150 million range.

Industry analysts keep a watchful eye on billings growth in the cybersecurity space because it gives them an indication of the company’s future revenues as well as present business trends. Billings denote future revenues that have yet to become visible in the company’s income statement, and they drive a company’s deferred revenues and OCF (operating cash flow).

However, despite exceeding analysts’ expectations, FireEye’s billings fell 18% on a year-over-year basis. Later in the series, we’ll discuss how FireEye’s billings fared in comparison to its peers Fortinet (FTNT) and Palo Alto Networks (PANW).

  1. software-as-a-service
  2. generally accepted accounting principles
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