FireEye: Cyber Security and Strong Clientele Will Lead to Upside
Cyber security solutions provider FireEye (FEYE) has been on a strong run on the stock market this year, with the stock appreciating more than 33% so far. This does not come as a surprise to me, since FireEye has reported strong financial growth in recent quarters.
For example, in the recently-reported second quarter, FireEye announced total revenue of $147.2 million, up 56% from the prior-year period and exceeding its own revenue guidance of $140 million to $144 million. Going forward, FireEye estimates third quarter revenue in the $164 million to $168 million range, indicating further revenue growth.
More importantly, FireEye's operating cash flow in the second quarter increased $100 million year-over-year to $39.1 million as against a negative $61.9 million during the same period last year.
A strong product portfolio will drive growth
The improvements to key solutions provided by FireEye for its Threat Prevention Platform include functionality and features for the FireEye Email Threat Prevention Platform that includes the presence of FireEye Advanced Threat Intelligence subscription on the EX Series of appliances. FireEye recently launched an Endpoint Security (HX Series) having advanced cyber security content support, improved compliance logging, and a uniquely developed reporting dashboard.
FireEye has also strategically globalized its security platform by releasing FireEye Endpoint Security in different languages such as German and Japanese. In addition, FireEye recently released the PX Series and IA Series of packet capture and analysis appliances for enterprise forensics. Also, FireEye provides regular threat intelligence updates depending on the implementation of an innovative zero day attacks highlighting weaknesses in Adobe Flash software, recognition of fresh variants of malware developed for Apple iOS, banking systems, point-of-sale workstations and introduction of a Chinese APT team's exploitation method on TechNet web portal of Microsoft.
Building up a strong customer base
FireEye has enhanced its international reach and improved its intelligence, expertise, and technology to capture new customers with a declaration with Visa to jointly-develop products, techniques and services. As a result, the company will be able to support issuers and merchants in enhancing protection against sophisticated cyber attacks focused on their payment infrastructure and IT gateway.
In addition, FireEye recently declared a technology consolidation with PFU Systems to integrate its iNetSec Smart Finder with NX Series security platform of FireEye. The company has also signed an agreement with the ACE Group, which is a major global casualty insurer and multiline property provider to enable cyber insurance to be designed particularly for a company's risk profile.
FireEye has also entered into a strategic alliance with Marsh, which is a worldwide leader in insurance broking and risk management, to allow customers with an innovative service developed to enable a proper identification of a company's ability to identify and counter the cyber attacks.
Additionally, FireEye has collaborated with the National Fusion Center Association (NFCA) to provide cyber training and intelligence sharing for state and local governments, including the mutual creation of the Automated Threat Intelligence Exchange network (ATIX) for Threat Assessment System (STAS) of the California State.
Moreover, Frost & Sullivan identifies FireEye as the key provider in the network security sandbox market. This market had a half billion size in 2014, and is forecasted to expand to nearly $3.5 billion by 2019 at an average CAGR of 45.6% from 2014 till 2019. Thus, FireEye has built up a strong customer base and operates in a fast-growing cyber security market, which will allow it to sustain its impressive rate of growth going forward.