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What FireEye’s Billings Growth Says about Its Future

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FireEye’s billings growth

Previously in this series, we discussed FireEye’s (FEYE) better-than-expected 1Q17 results due to improvements in the company’s Subscription and Services offerings. Despite cybersecurity expecting to rule the technology space in 2017, FireEye wasn’t able to benefit from this growth, as shown by its 1Q17 earnings results.

However, FireEye posted a narrower-than-expected loss with its 1Q17 results, giving some hope to its investors.
Billings fall

Billings continued to be a source of worry for FireEye. Its billings fell 18% and grew at a slower pace than its revenues, indicating a slowdown in demand. As the chart above shows, the company’s Product Subscriptions segment constituted half of the company’s billings.

Among FireEye’s peers in the cybersecurity space, Fortinet and Palo Alto Networks reported double-digit billings growth. Fortinet’s (FTNT) billings rose 22% in 1Q17 to $403 million.

Palo Alto Networks (PANW) reported billings growth of 22% on a YoY (year-over-year) basis to $561.6 million in fiscal 2Q17.[1. fiscal 2Q17 ended January 31, 2017] PANW plans to announce its fiscal 3Q17 results toward the end of May.

Palo Alto Networks is a prominent player in the cybersecurity space, behind only Cisco Systems (CSCO) and Check Point Software Technologies (CHKP) in the security appliance market.

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FireEye’s 2Q17 billings guidance

Despite exceeding analysts’ expectations, FireEye’s billings pale when compared with its peers’ billings growth. For 2Q17, FireEye expects its billings to range from $155 million–$175 million. Its non-GAAP[2. generally accepted accounting principles] gross margin is expected to be 72%, with a loss of $0.10–$0.14 per share.

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