FireEye: a Screaming Buy

FireEye (FEYE) announced fourth quarter ended December 31, 2015 preliminary results and estimates total fourth quarter revenue in the range of $184 million to $185 million and net billings for fourth quarter are estimated to be in $256 million to $257 million range.

In addition, FireEye also projects fourth quarter positive cash flow from operations in $7 million to $9 million range and leading to the complete fiscal year 2015 cash flow from operations in the range of $35 million to $37 million.

The advanced cybersecurity provider forecasts impressive growths across both its fourth quarter top and bottom lines primarily driven by the expansion of innovative security products portfolio and significant customer traction for its new subscription services.

Impressive growth ahead

FireEye is expected to deliver fourth quarter billings and revenue in the ranges of $256 million to $257 million and $184 million to $185 million respectively and well in line with fourth quarter 2015 company guidance for billings and revenue in the ranges of $240 million to $260 million and $182 million to $190 million, respectively.
The non-GAAP operating cash flows per share for the quarter are projected to be in range of $7 million to $9 million and concluding cash, cash equivalents and ST investments are believed to be approximately $1,170 million.

The key security company has uniquely transformed from primarily being a product company to an advanced platform provider with expanding mix of recurring contribution and support. Specifically, recurring contribution along with support billings constituted 69 percent of non-Mandiant billings for 2015 compared to 56% during 2012.

The solid quarterly financial results projected for the quarter, somewhat exceeding the company’s guidance highlights the successful transition of FireEye from just being a product company earlier to becoming a superior platform provider, offering sophisticated mix of persistent subscription services and support.

The opportunity  

FireEye is continuously focused on improving its quarter-over-quarter revenue growth rate by strategically partnering with ForeScout Technologies Inc. to combine superior threat identification capability with advanced agentless device visibility approach of latter for quick threat response periods.  Further, FireEye strategically declared its recent partnership with Belden to develop advanced and high-secured Industrial Control Systems (ICS) to increasingly support the companies that are reeling with greater cyber risks from the major ICS vector.

Importantly, FireEye recently declared the strategic acquisition of the privately held company  iSIGHT Partners which is a worldwide leader in providing threat intelligence. This unique combination identifies and exploits the key role of extreme fidelity risk intelligence for preventing customers from latest cyber attacks and improve upon FireEye’s superior threat detection and prevention system to further allow access to contextual risk intelligence for prospective attacks prior to their occurrence.

The strategic partnership of FireEye with other major industry players in the increasingly expanding global cyber threat detection and prevention industry in addition to the planned acquisition of other smaller players in this segment is believed to boost FireEye’s already robust portfolio of advanced security products and services while increasingly delivering attractive shareholder returns.


Overall, the investors are advised to “Sell” any equity held in FireEye, Inc. considering the company’s poor growth prospects with PEG ratio of -0.61, indicating no growth but decline compared to somewhat healthy industry’s growth average of 0.86. The profit margin of -86.56% signifies no profit but loss. However, FireEye is cash rich with significant total cash of $1.17 billion against smaller total debt position of $706.20 million, encouraging the company to make future growth investments.
Published on Mar 9, 2016
By Vinay Singh

Copyrighted 2020. Content published with author's permission.

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