FireEye Outperforms for the Quarter

FireEye reported very strong first quarter 2014 results above our and Street consensus top-line projections and well above the company’s billings guidance range. The company raised its view for billings and revenue, but its outlook also calls for higher research and development costs to account for upcoming new product launches and increased engineering headcount from its acquisition of nPulse.

NPulse expands the company’s offerings into the network DVR and analytics space to provide additional context and visibility for use in forensic analysis. We were pleased with the strong billings and revenue performance for the quarter and guidance above the consensus, reflecting the strength of the company’s product portfolio. Given the strong fundamental results, we are perplexed by the negative stock reaction after hours and believe this could create an attractive entry point.

The company reported very good progress on its integration of Mandiant’s operations, reporting 15 large deals that management attributed to the cross-selling synergies of the respective offerings, with seven of those deals generating more than $1 million in international markets.

Management indicated that it plans to launch four new products in the next 90 days, as well as new service offerings; the new product offerings include initiatives regarding endpoint protection that would appear to be the beginning of activity in this space to leverage the capabilities of the combined strengths of FireEye and the former Mandiant business. Management’s full-year outlook consists of billings growth of 105.4%, revenue growth of 153.8%, and non-GAAP earnings per share that represents a decrease in deficit by 25.4%.