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Can FireEye Keep Up with the Competition?

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FireEye invested $64.2 million in R&D

Amid the rise of cyberthreats, cybersecurity providers can be seen directing more of their resources to innovations. In 3Q17, FireEye (FEYE) invested more than $64.2 million in R&D (research and development), compared to $60.8 million in the prior quarter and $62.7 million in the year-ago quarter. Symantec’s (SYMC) R&D budget was $241 million in fiscal 2Q18 (September quarter), compared to $233 million in the prior quarter.

Security vendors doubling down on R&D investment

Proofpoint (PFPT) invested $32.5 million in R&D in the September quarter compared to $32.3 million in the prior quarter. Check Point Software Technologies’ (CHKP) R&D budget for the September quarter was $47.3 million compared to $44.5 million in the prior quarter. SecureWorks (SCWX) invested $19.7 million in R&D in the September quarter compared to $19.5 million in the prior quarter.

With cybersecurity vendors doubling down on R&D investments to expand and strengthen their product portfolios, will FireEye be able to keep up with the competition and capitalize on the growing demand for cybersecurity? Time will tell.

A strong balance sheet

FireEye exited 3Q17 with a fairly healthy balance sheet, indicating that the company could continue to fund its R&D programs without much trouble in order to sharpen its competitive edge. FireEye had an $878.8 million cash balance at the end of 3Q17, offset by total debt of $770 million. FireEye also continues to generate cash from its operations. It generated cash flow from operations of $12.5 million in 3Q17, exceeding internal guidance that called for cash flow from operations of $1 million–$10 million.

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