FireEye earnings beat Street; outlook rises on heightened security awareness in wake of SolarWinds attack

FireEye Inc. breezed past Wall Street estimates for quarterly results in every category Tuesday and increased its full-year outlook.

FireEye
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is benefiting from a higher security awareness following last year’s SolarWinds Corp.
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cyberattack as companies bolster their systems. That, however, has driven hackers into finding other vulnerabilities.

“There’s a lot more zero-day exploits out there,” Chief Executive Kevin Mandia told MarketWatch in an interview. A zero-day exploit is a computer vulnerability that is exploited as soon as it is discovered by hackers and before security professionals can develop a patch to fix it.

“Part of that is good news, it means that security safeguards are getting better — they’re not getting in through the front door anymore.” Mandia said. “That drives our business.”

The Milpitas, Calif.-based cybersecurity company reported a first-quarter loss of $55.2 million, or 24 cents a share, compared with a loss of $76.3 million, or 35 cents a share, in the year-ago period. Adjusted earnings, which excludes expenses for stock-based compensation and other items, were 8 cents a share, compared with 7 cents a share in the year ago quarter. Revenue rose to $246.3 million from $224.7 million in the year-ago quarter.

Analysts surveyed by FactSet had forecast adjusted earnings of 6 cents a share on revenue of $237 million, based on FireEye’s forecast of 5 cents to 7 cents a share on revenue of $235 million to $238 million. FireEye shares gained about 2% in after-hours trading immediately following the release of the results.

Cloud-based services became a bigger part of FireEye’s revenue stream, rising to $85.9 million from $68.4 million in the year-ago period. That’s starting to catch up to other products, including subscription and support revenue of $97.2 million, down from $105.7 million in the year-ago period. Analysts had forecast $81.7 million in cloud revenue and $97.1 million in other product revenue, according to FactSet.

Professional services revenue rose to $63.3 million from $50.6 million in the year-ago quarter. Analysts had forecast $57.7 million, FactSet reported.

Using annual recurring revenue as a metric, FireEye’s cloud business has already overtaken its on-premises business. ARR is a metric often used by software-as-a-service companies to show how much revenue the company can expect based on subscriptions. Total ARR rose to $643 million from $590.1 million a year ago.

FireEye expects second-quarter adjusted earnings of 8 cents to 9 cents a share on revenue of $246 million to $250 million, while analysts had forecast earnings of 8 cents a share on revenue of $244.1 million, according to FactSet.

For the year, FireEye hiked its outlook to an adjusted earnings range of 39 cents to 41 cents a share on revenue of $1.01 billion to $1.03 billion, from a previous 35 cents to 37 cents a share on revenue of $990 million to $1.01 billion. Analysts were estimating earnings of 36 cents a share on revenue of $1 billion, according to FactSet.