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What Does FireEye’s Billings Growth Say about Its Future?

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Factors that drove FEYE’s billings growth

Previously in this series, we discussed FireEye’s (FEYE) billings. Despite beating analysts’ expectations in the last quarter, its billings are still a source of concern. FireEye’s billings are integral in the context of its changed focus from a hardware-focused cybersecurity company to its new cloud- and subscription-based offerings.

FireEye’s flexible network security solution (or NX), refresh migration opportunity, and growth in FireEye’s Mandiant consulting business drove the company’s billings growth in 2Q17.

Consulting revenues from Mandiant grew 19% to $33.7 million in 2Q17. FireEye’s strategic billion-dollar acquisition of Mandiant strengthened its position in the advanced malware industry. Threat intelligence, incident response, and endpoint security offerings were Mandiant’s specialties.

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In the network security space, Fortinet (FTNT) and Palo Alto Networks (PANW) pose stiff competition to FireEye. FireEye’s Network Security Power (NX series) has a maximum bandwidth of 4 Gbps (gigabits per second). In comparison, Palo Alto Networks noted that its PA 7080 firewall “can deliver up to 200Gbps throughput and 100Gbps with all security capabilities enabled.”

Despite exceeding analysts’ expectations and increased activity in the overall cybersecurity space, FireEye’s billings growth is inadequate when compared with its peers’ billings growth.

FireEye’s 3Q17 expectations

For 3Q17, FireEye expects its revenues and billings to stand in the range of $183 million–$189 million and $190 million–$205 million, respectively. The company also expects positive cash flow of $1 million–$10 million. Its net loss is expected to be $0.06–$0.09 per share.

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