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FireEye (FEYE) Q3 Earnings & Revenues Top Estimates, Up Y/Y

FireEye, Inc. FEYE reported better-than-expected results for third-quarter 2020. The company’s third-quarter non-GAAP earnings came in at 11 cents per share, while the Zacks Consensus Estimate was pegged at 7 cents. FireEye’s quarterly earnings also witnessed significant improvement from the year-ago quarter’s adjusted earnings of 2 cents per share.

Revenues increased 6% year over year to $238 million as well as surpassed the consensus mark of $227.3 million. FireEye’s overall quarterly results benefited from increased demand for cybersecurity solutions amid the coronavirus-induced work-and-learn-from-home trend.

Quarter Details

Segment wise, product, subscription and support revenues increased 2.2% year over year to $183.8 million and revenues from professional services were up 18.5% year over year to $54.6 million.

FireEye, Inc. Price, Consensus and EPS Surprise

FireEye, Inc. Price, Consensus and EPS Surprise

FireEye, Inc. price-consensus-eps-surprise-chart | FireEye, Inc. Quote

However, FireEye’s on-premise product and related business revenues decreased 8% year over year.

Quarterly billings of $203 million slid 4% year over year.

Non-GAAP gross margin contracted 200 basis points (bps) year over year to 71%. However, non-GAAP operating margin increased to 12% from the year-ago quarter’s 2%, mainly due to efficient cost management.

Balance Sheet & Cash Flow

FireEye exited the third quarter with cash and cash equivalents, and short-term investments of approximately $942 million, slightly up from the previous quarter’s $914 million.

The company generated operating cash flow of $33 million in the September-end quarter. In the first nine months of 2020, FireEye has generated $23.5 million.

Guidance

For fourth-quarter 2020, FireEye anticipates revenues between $237 million and $241 million. The Zacks Consensus Estimate for revenues currently stands at $236.4 million, calling for a 0.6% year-over-over improvement.

The company anticipates non-GAAP gross margin of 70-71%. Non-GAAP operating margin is estimated to be between 10% and 11%. FireEye expects non-GAAP earnings in the band of 9-11 cents.

Buoyed by better-than-expected third-quarter results, the company raised the outlook for full-year 2020. FireEye now anticipates revenues in the $930-$934 million band, up from the earlier projection of $905-$925 million. It also expects non-GAAP earnings between 28 cents and 30 cents, much higher than the previously-estimated range of 22-26 cents per share.

Zacks Rank and Stocks to Consider

FireEye currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector include Zoom Video Communications ZM, Brightcove BCOV and CDW Corporation CDW, all sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Zoom, Brightcove and CDW is currently pegged at 25%, 15%, and 13.1%, respectively.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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