- Revenue from continuing operations increased 17 percent from
the second quarter of 2020
- Annualized recurring revenue for continuing operations
increased 19 percent from the end of the second quarter of 2020 to
$244 million1
- Repurchased $68 million in common stock under Board-approved
stock repurchase plan
FireEye, Inc. (NASDAQ: FEYE), the intelligence-led security
company, today announced financial results for the second quarter
ended June 30, 2021.
“The Mandiant Solutions business continued to deliver strong
growth in revenue and annualized recurring revenue for the second
quarter ended June 30, 2021,” said Kevin Mandia, FireEye Chief
Executive Officer.
“With the elevated threat environment, organizations are
increasingly turning to Mandiant to proactively assess whether they
are prepared and protected before a breach occurs,” added Mandia.
"The Mandiant Advantage platform enables customers to continuously
improve their cybersecurity effectiveness through ongoing
validation and security automation.”
On June 2, 2021, the company announced the sale of the FireEye
Products business to a consortium led by Symphony Technology Group
(“STG”) in exchange for a total cash consideration of $1.2 billion
and assumption of certain liabilities. The transaction is currently
expected to close by the end of the fourth quarter of 2021, subject
to customary regulatory approvals and closing conditions. As a
result, financial results for the FireEye Products business were
classified as discontinued operations in the condensed consolidated
statements of operations and excluded from continuing operations.
Results of discontinued operations include all revenue and expenses
directly attributable to the FireEye Products business, and exclude
expenses for shared resources and general corporate overhead.
Second Quarter 2021 Financial Highlights for Continuing
Operations
- Revenue of $114 million, an increase of 17 percent from the
second quarter of 2020
- Annualized recurring revenue of $244 million, an increase of 19
percent from the end of the second quarter of 20201
- Deferred revenue of $297 million, an increase of 22 percent
from the end of the second quarter of 2020
- GAAP operating margin of negative 74 percent, compared to GAAP
operating margin of negative 79 percent in the second quarter of
2020
- Non-GAAP operating margin of negative 26 percent, compared to
non-GAAP operating margin of negative 28 percent in the second
quarter of 20202
- GAAP net loss per basic share attributable to common
stockholders of 44 cents, compared to GAAP net loss per basic share
attributable to common stockholders of 41 cents in the second
quarter of 2020
- Non-GAAP net loss per basic share attributable to common
stockholders of 14 cents, compared to non-GAAP net loss per basic
share attributable to common stockholders of 13 cents in the second
quarter of 20202
- GAAP and non-GAAP operating margin and net loss per basic share
included approximately $15 million in costs from shared resources
to support the FireEye Products business and an estimated $3
million in corporate overhead and shared program expenses that
would have been allocated to the FireEye Products business under
separate reporting for the combined company3
Second Quarter 2021 Financial Highlights for Combined
Continuing and Discontinued Operations
- Revenue of $248 million, an increase of 8 percent from the
second quarter of 2020
- GAAP operating margin of negative 20 percent, compared to GAAP
operating margin of negative 17 percent in the second quarter of
2020
- Non-GAAP operating margin of 10 percent, compared to non-GAAP
operating margin of 10 percent in the second quarter of 20202
- GAAP net loss per basic share attributable to common
stockholders of 29 cents, compared to GAAP net loss per basic share
attributable to common stockholders of 24 cents in the second
quarter of 2020
- Non-GAAP net income per basic share attributable to common
stockholders of $0.09, compared to non-GAAP net income per basic
share attributable to common stockholders of $0.09 in the second
quarter of 20202
- Net cash flow provided by operating activities of $23 million,
an increase of 60 percent from the second quarter of 2020
1 Annualized recurring revenue is defined as the annualized
run-rate of active term licenses, subscriptions, and support
contracts at the end of a reporting period.
2 A reconciliation of GAAP to non-GAAP financial measures is
provided in the financial statement tables included in this press
release. An explanation of these measures is also included under
the heading “Non-GAAP Financial Measures.”
3 Costs for shared resources incurred prior to the completion of
the divestiture of the FireEye Products business are included in
the GAAP and non-GAAP operating expenses of continuing operations.
We anticipate the majority of operating costs to support the
FireEye Products business that are incurred after the divestiture
is completed will be reimbursed under a Transition Services
Agreement with STG. After the divestiture, these costs, net of
reimbursement, if any, will be included in other income and
expense.
Third Quarter Outlook for Continuing Operations
The company provides the guidance below for continuing
operations based on current market conditions and expectations. The
company emphasizes that the guidance is subject to various
important cautionary factors referenced in the section entitled
"Forward-Looking Statements" below, including risks and
uncertainties associated with the sale of the FireEye Products
business announced on June 2, 2021.
Q3 2021 Outlook
Revenue
$118 - $122 million
Non-GAAP gross margin
58% - 59%
Non-GAAP operating margin
(27)% - (29)%
Net interest expense
~ $2.5 million
Provision for non-GAAP income taxes
~ $1 million
Weighted average basic shares
outstanding
~ 240 million
Non-GAAP net loss per share from
continuing operations attributable to common stockholders, basic
and diluted
$(0.16) - $(0.14)
Non-GAAP net income per share from
discontinued operations attributable to common stockholders, basic
and diluted
$0.19 - $0.21
Non-GAAP net income per share attributable
to common stockholders, basic and diluted
$0.05 - $0.07
The outlook for third quarter non-GAAP operating margin and
non-GAAP net income (loss) per basic share from continuing
operations includes an estimated $14 million to $16 million in
costs to support the FireEye Products business and an estimated $3
million in corporate overhead and shared program expenses that
would have been allocated to the FireEye Products business under
separate accounting for the combined company.
Guidance for non-GAAP financial measures excludes stock-based
compensation, amortization of stock-based compensation expense
capitalized in software development costs, amortization of
intangible assets, acquisition related expenses, restructuring
charges, non-cash interest expense related to the company’s
convertible senior notes, discrete tax provision (benefit),
dividends on Series A convertible preferred stock, accretion of
Series A convertible preferred stock, transformation and transition
expense, other special non-recurring items, and shares issuable
upon conversion of the company's convertible senior notes and
Series A convertible preferred shares that are anti-dilutive. A
reconciliation of non-GAAP guidance measures to the most directly
comparable GAAP financial measures is not available on a
forward-looking basis due to the uncertainty regarding, and the
potential variability of, the amounts of stock-based compensation
expense, amortization of intangible assets, and non-recurring
expenses that may be incurred in the future. Stock-based
compensation expense is impacted by the company’s future hiring and
retention needs, as well as the future fair market value of the
company’s common stock, all of which are difficult to predict and
subject to constant change. The actual amount of stock-based
compensation expense in the third quarter of 2021 will have a
significant impact on the company’s GAAP operating margin and net
loss per share attributable to common stockholders. Further,
amortization of intangible assets, as well as other non-recurring
expenses, if any, will also impact results. Accordingly, a
reconciliation of the non-GAAP financial measure guidance to the
most directly comparable GAAP financial measures for future periods
is not available without unreasonable effort.
Third Quarter 2021 Conference Participation and Investor
Events
FireEye also today announced conference participation and
investor events for the third quarter of 2021:
Date
Presentation Time
(PDT)
Conference/Event
August 11, 2021
10:20 a.m. - 10:50 a.m.
KeyBanc Virtual Technology Leadership
Forum
August 12, 2021
10:00 a.m. - 10:45 a.m.
FireEye August Threat Briefing for
Investors and Financial Analysts
August 24, 2021
12:00 p.m. - 12:45 p.m.
BMO Technology Summit
September 9, 2021
10:00 a.m. - 10:45 a.m.
FireEye September Threat Briefing for
Investors and Financial Analysts
September 13, 2021
TBD
Piper Sandler Global Technology
Conference
The above presentations will be webcast. Links to live and
archived audio webcasts for these events will be available on the
Investor Relations section of the company’s website at
https://investors.fireeye.com.
Conference Call Information
FireEye will host a conference call today, August 5, 2021 at 5
p.m. Eastern time (2 p.m. Pacific time) to discuss its second
quarter financial results and the company’s outlook for the third
quarter continuing operations. Interested parties may access the
conference call by dialing 800-708-4539 (domestic) or 847-619-6396
(international). A live audio webcast of the call can be accessed
from the Investor Relations section of the company's website at
https://investors.fireeye.com. An archived version of the webcast
will be available at the same website shortly after the conclusion
of the live event.
Forward-Looking Statements
This press release contains forward-looking statements,
including statements related to future financial results for the
third quarter, including revenue, non-GAAP gross margin, non-GAAP
operating margin, net interest expense, provision for non-GAAP
income taxes, weighted average basic shares outstanding, non-GAAP
net loss per share from continuing operations attributable to
common stockholders, non-GAAP net income per share from
discontinued operations attributable to common stockholders, and
non-GAAP net income per share attributable to common stockholders
in the section entitled “Third Quarter Outlook for Continuing
Operations” above, as well as statements regarding plans and
opportunities, including the announced sale of the FireEye Products
business.
These forward-looking statements involve risks and
uncertainties, as well as assumptions which, if they do not fully
materialize or prove incorrect, could cause FireEye’s results to
differ materially from those expressed or implied by such
forward-looking statements. The risks and uncertainties that could
cause FireEye’s results to differ materially from those expressed
or implied by such forward-looking statements include failure to
satisfy any of the conditions to the completion of the proposed
transaction with STG; the occurrence of any event, change or other
circumstance that could give rise to the termination of the Asset
Purchase Agreement with STG; the effect of the sale of the FireEye
assets on the company’s retained businesses and products; retention
of existing executive leadership team members; difficulties in
improving go forward execution and product development during
transitions; the ability of FireEye to successfully execute
strategic plans; the ability to maintain customer and partner
relationships; the ability of FireEye to achieve its cost and
operating efficiency goals; the anticipated growth of certain
market segments; FireEye’s sales pipeline and business strategy;
the timing and market acceptance of new product releases and
upgrades; and the successful development of new products and the
degree to which these products gain market acceptance; whether and
when FireEye further executes on its stock repurchase program;
customer demand and adoption of FireEye’s products, solutions and
services; real or perceived defects, errors or vulnerabilities in
FireEye's products, solutions or services; any delay in the release
of FireEye's new products, solutions or services; the impact of the
COVID-19 pandemic on FireEye's business, results of operations,
liquidity and capital resources; FireEye's ability to react to
trends and challenges in its business and the markets in which it
operates; FireEye's ability to anticipate market needs or develop
new or enhanced products, solutions and services to meet those
needs; FireEye’s ability to hire and retain key executives and
employees; FireEye’s ability to attract new and retain existing
customers and train its sales force; the budgeting cycles, seasonal
buying patterns and length of FireEye’s sales cycle; risks
associated with new offerings; sales and marketing execution risks;
the failure to achieve expected synergies and efficiencies of
operations between FireEye and its acquired companies; the ability
of FireEye and its acquired companies to successfully integrate
their respective market opportunities, technologies, products,
personnel and operations; the ability of FireEye and its partners
to execute their strategies, plans, objectives and expected
investments with respect to FireEye’s partnerships; and general
market, political, economic, and business conditions, as well as
those risks and uncertainties included under the captions “Risk
Factors” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” in FireEye’s Form 10-Q filed
with the Securities and Exchange Commission on April 30, 2021,
which should be read in conjunction with these financial results
and is available on the Investor Relations section of FireEye’s
website at investors.fireeye.com and on the SEC website at
www.sec.gov.
All forward-looking statements in this press release are based
on information available to the company as of the date hereof, and
FireEye does not assume any obligation to update the
forward-looking statements provided to reflect events that occur or
circumstances that exist after the date on which they were made,
except as required by law. Any future product, service, feature, or
related specification that may be referenced in this release is for
informational purposes only and is not a commitment to deliver any
offering, technology or enhancement. FireEye reserves the right to
modify future product or service plans at any time.
Non-GAAP Financial Measures
In this release FireEye has provided financial information that
has not been prepared in accordance with generally accepted
accounting principles in the United States (GAAP). These non-GAAP
financial measures are not based on any standardized methodology
and are not necessarily comparable to similar measures used by
other companies. The company uses these non-GAAP financial measures
internally in analyzing its financial results and believes the use
of these non-GAAP financial measures is useful to investors as an
additional tool to evaluate ongoing operating results and trends,
and in comparing the company's financial results with other
companies in its industry, many of which present similar non-GAAP
financial measures.
Non-GAAP financial measures are not meant to be considered in
isolation or as a substitute for comparable financial information
prepared in accordance with GAAP and should be read only in
conjunction with the company's consolidated financial statements
prepared in accordance with GAAP. A reconciliation of the company's
non-GAAP financial measures to their most directly comparable GAAP
financial measures has been provided in the financial statement
tables included in this press release, and investors are encouraged
to review the reconciliation.
Non-GAAP gross margin. FireEye defines non-GAAP gross margin as
total gross profit excluding stock-based compensation expense,
amortization of stock-based compensation expense capitalized in
software development costs, amortization of intangible assets, and,
as applicable, other special or non-recurring items, divided by
total revenue.
Non-GAAP operating income (loss) from continuing operations and
non-GAAP operating margin from continuing operations. FireEye
defines non-GAAP operating income (loss) from continuing operations
as operating income (loss) from continuing operations excluding
stock-based compensation expense, amortization of stock-based
compensation expense capitalized in software development costs,
amortization of intangible assets, acquisition-related expenses,
transformation and transition expense, restructuring charges, and
other special or non-recurring items. FireEye defines non-GAAP
operating margin as non-GAAP operating income (loss) divided by
total revenue.
Non-GAAP operating income (loss) from combined continuing and
discontinued operations and non-GAAP operating margin from combined
continuing and discontinued operations. FireEye defines non-GAAP
operating income (loss) from combined continuing and discontinued
operations as operating income (loss) from continuing operations
plus operating income from discontinued operations, excluding
stock-based compensation expense, amortization of stock-based
compensation expense capitalized in software development costs,
amortization of intangible assets, acquisition-related expenses,
restructuring charges, transformation and transition expense, and
other special or non-recurring items. FireEye defines non-GAAP
operating margin from combined continuing and discontinued
operations as non-GAAP operating income (loss) from continuing
operations plus non-GAAP operating income from discontinued
operations, divided by revenue from continuing operations plus
revenue from discontinued operations.
Non-GAAP net loss from continuing operations attributable to
common stockholders. FireEye defines non-GAAP net loss from
continuing operations attributable to common stockholders as net
loss from continuing operations excluding stock-based compensation
expense, amortization of stock-based compensation expense
capitalized in software development costs, amortization of
intangible assets, acquisition-related expenses, restructuring
charges, transformation and transition expense, and other special
or non-recurring items.
Non-GAAP net income (loss) attributable to common stockholders.
FireEye defines non-GAAP net income (loss) attributable to common
stockholders as net income (loss) from continuing operations plus
net income (loss) from discontinued operations, excluding
stock-based compensation expense, amortization of stock-based
compensation expense capitalized in software development costs,
amortization of intangible assets, acquisition-related expenses,
restructuring charges, transformation and transition expense,
non-cash interest expense related to the company’s convertible
senior notes, discrete tax provision (benefit), dividends on Series
A convertible preferred stock, accretion of Series A convertible
preferred stock, and other special or non-recurring items.
Non-GAAP net income (loss) per basic share from continuing
operations attributable to common stockholders. FireEye defines
non-GAAP net loss per basic share from continuing operations
attributable to common stockholders as non-GAAP net loss from
continuing operations attributable to common stockholders divided
by weighted average basic shares outstanding, which excludes stock
options, restricted stock units, performance stock units, and
shares issuable upon conversion of the company's convertible senior
notes and Series A convertible preferred shares that are
anti-dilutive.
Non-GAAP net income (loss) per basic share attributable to
common stockholders. FireEye defines non-GAAP net income per basic
share attributable to common stockholders as non-GAAP net loss from
continuing operations attributable to common stockholders plus
non-GAAP net income from discontinued operations, divided by
weighted average basic shares outstanding. Weighted average basic
shares used to calculate non-GAAP net income per basic share
attributable to common stockholders excludes stock options,
restricted stock units, performance stock units, shares issuable
upon conversion of the company's convertible senior notes and
Series A convertible preferred shares that are anti-dilutive.
Non-GAAP net income attributable to common stockholders and
non-GAAP net income per basic share attributable to common
stockholders in the second quarter of 2021 excluded stock-based
compensation expense, amortization of stock-based compensation
expense capitalized in software development costs, amortization of
intangible assets, restructuring charges, transformation and
transition expense, non-cash interest expense related to
convertible senior notes issued in June 2015 and the second quarter
of 2018, and dividends on Series A convertible preferred stock.
Weighted average basic shares outstanding used to calculate
non-GAAP net income per basic share attributable to common
stockholders excluded stock options, restricted stock units,
performance stock units, and shares issuable upon conversion of the
company's convertible senior notes and Series A convertible
preferred shares that were anti-dilutive.
Non-GAAP net income attributable to common stockholders and
non-GAAP net income per basic share attributable to common
stockholders in the second quarter of 2020 excluded stock-based
compensation expense, amortization of stock-based compensation
expense capitalized in software development costs, amortization of
intangible assets, restructuring charges, and non-cash interest
expense related to convertible senior notes issued in June 2015 and
the second quarter of 2018. Weighted average basic shares
outstanding used to calculate non-GAAP net income per basic share
attributable to common stockholders excluded stock options,
restricted stock units, performance stock units, and shares
issuable upon conversion of the company's convertible senior notes
that were anti-dilutive.
FireEye considers these non-GAAP financial measures to be useful
metrics for management and investors because they exclude the
effect of stock-based compensation expense, amortization of
stock-based compensation expense capitalized in software
development costs, amortization of intangible assets, acquisition
related expenses, restructuring charges, transformation and
transition expense, non-cash interest expense related to
convertible senior notes issued in June 2015 and the second quarter
of 2018, dividends on Series A convertible preferred stock, and
other non-recurring and discrete items so that management and
investors can compare the company's core business operating results
over multiple periods.
There are a number of limitations related to the use of these
non-GAAP financial measures versus their nearest GAAP equivalents.
First, these non-GAAP financial measures exclude stock-based
compensation expense. Stock-based compensation is an important part
of FireEye employees' overall compensation and has been, and will
continue to be for the foreseeable future, a significant recurring
expense in the company's business. Second, the components of the
costs that FireEye excludes in its calculation of these non-GAAP
financial measures, including not only stock-based compensation,
but also amortization of stock-based compensation expense
capitalized in software development costs, non-recurring or
non-operating items such as amortization of intangible assets,
acquisition related expenses, restructuring charges, non-cash
interest expense related to the company’s convertible senior notes,
and dividends on Series A convertible preferred stock, may differ
from the components excluded by peer companies when they report
their non-GAAP results of operations. FireEye compensates for these
limitations by providing specific information regarding the GAAP
amounts excluded from non-GAAP financial measures and evaluating
non-GAAP financial measures together with their nearest GAAP
equivalents.
About FireEye, Inc.
FireEye is the intelligence-led security company. Working as a
seamless, scalable extension of customer security operations,
FireEye offers a single platform that blends innovative security
technologies, nation-state grade threat intelligence, and
world-renowned Mandiant® consulting. With this approach, FireEye
eliminates the complexity and burden of cyber security for
organizations struggling to prepare for, prevent, and respond to
cyber attacks. FireEye has over 10,100 customers across 103
countries, including more than 50 percent of the Forbes Global
2000.
© 2021 FireEye, Inc. All rights reserved. FireEye and Mandiant
are registered trademarks or trademarks of FireEye, Inc. in the
United States and other countries. All other brands, products, or
service names are or may be trademarks or service marks of their
respective owners.
FireEye, Inc.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Unaudited, in
thousands)
June 30, 2021
December 31, 2020
Assets
Current assets:
Cash and cash equivalents
$
387,310
$
676,454
Short-term investments
866,301
624,824
Accounts receivable, net
77,257
94,339
Inventories
—
—
Prepaid expenses and other current
assets
40,634
39,912
Current assets held for sale
$
500,688
$
126,715
Total current assets
1,872,190
1,562,244
Property and equipment, net
65,886
64,336
Operating lease right-of-use assets,
net
36,096
36,728
Goodwill
1,050,924
1,050,962
Intangible assets, net
98,447
120,555
Deposits and other long-term assets
18,390
18,084
Long-term assets held for sale
$
—
$
392,974
Total Assets
$
3,141,933
$
3,245,883
Liabilities, Convertible preferred stock
and Stockholders' equity
Current Liabilities:
Accounts payable
$
9,375
$
4,027
Operating lease liabilities, current
12,157
14,556
Accrued and other current liabilities
19,564
19,730
Accrued compensation
65,226
78,842
Convertible senior notes, current, net
440,497
—
Deferred revenue, current
235,960
226,356
Current liabilities held for sale
$
637,669
$
410,233
Total current liabilities
1,420,448
753,744
Convertible senior notes, non-current,
net
543,306
960,896
Deferred revenue, non-current
61,366
57,897
Operating lease liabilities,
non-current
56,624
41,802
Other long-term liabilities
4,587
12,339
Long-term liabilities held for sale
$
—
$
285,251
Total liabilities
2,086,331
2,111,929
Commitments and contingencies:
Series A convertible preferred stock
410,125
401,050
Stockholders' equity:
Common stock
24
24
Additional paid-in capital
3,653,574
3,623,243
Treasury stock
(80,000
)
(80,000
)
Accumulated other comprehensive income
1,419
3,834
Accumulated deficit
(2,929,540
)
(2,814,197
)
Total stockholders’ equity
645,477
732,904
Total Liabilities, Convertible preferred
stock and Stockholders' equity
$
3,141,933
$
3,245,883
FireEye, Inc.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited, in thousands,
except per share amounts)
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Revenue:
Platform, cloud subscription and managed
services
$
51,936
$
48,051
$
107,935
$
93,353
Professional services
61,974
49,179
120,663
96,031
Total revenue
113,910
97,230
228,598
189,384
Cost of revenue: (1)(2)(3)
Platform, cloud subscription and managed
services
28,243
26,497
54,856
52,357
Professional services
35,282
27,049
67,754
55,841
Total cost of revenue
63,525
53,546
122,610
108,198
Total gross profit
50,385
43,684
105,988
81,186
Operating expenses:
Research and development (1)(2)(3)
40,930
28,665
82,835
57,743
Sales and marketing (1)(2)
63,018
52,840
124,231
111,586
General and administrative (1)
29,020
26,349
54,371
54,857
Restructuring charges (4)
1,927
12,558
1,927
18,775
Total operating expenses
134,895
120,412
263,364
242,961
Operating loss
(84,510
)
(76,728
)
(157,376
)
(161,775
)
Other expense, net (5)
(13,868
)
(12,612
)
(26,277
)
(25,022
)
Loss before income taxes from continuing
operations before income taxes
(98,378
)
(89,340
)
(183,653
)
(186,797
)
Provision for income taxes (6)
763
656
1,943
1,006
Loss from continuing operations
$
(99,141
)
$
(89,996
)
$
(185,596
)
$
(187,803
)
Net income from discontinued operations,
net of income taxes
34,445
36,721
70,254
58,222
Net loss
$
(64,696
)
$
(53,275
)
$
(115,342
)
$
(129,581
)
Dividend on series A convertible preferred
stock (7)
(4,563
)
—
(9,075
)
—
Accretion of series A convertible
preferred stock (8)
—
—
(82
)
—
Net loss attributable to common
stockholders
$
(69,259
)
$
(53,275
)
$
(124,499
)
$
(129,581
)
Net loss per share attributable to
common stockholders, basic and diluted:
Continuing operations
$
(0.44
)
$
(0.41
)
$
(0.83
)
$
(0.86
)
Discontinued operations
0.15
0.17
0.30
0.27
Net loss per share attributable to common
stockholders, basic and diluted
$
(0.29
)
$
(0.24
)
$
(0.53
)
$
(0.59
)
Weighted average shares used in computing
net loss per share, basic and diluted
237,279
221,352
236,016
219,570
FireEye, Inc.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited, in
thousands)
Six Months Ended June
30,
2021
2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
$
(185,596
)
$
(187,803
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization
46,648
37,684
Stock-based compensation
72,173
52,802
Non-cash interest expense related to
convertible senior notes
22,907
24,367
Deferred income taxes
(114
)
154
Other
20
1,166
Changes in operating assets and
liabilities, net of assets acquired and liabilities assumed in
business acquisitions:
Accounts receivable
17,294
25,910
Prepaid expenses and other assets
6,323
5,089
Accounts payable
4,331
(6,203
)
Accrued liabilities
(1,540
)
(5,046
)
Accrued compensation
(13,616
)
14,245
Deferred revenue
13,072
(29,157
)
Other long-term liabilities
(4,917
)
(5,701
)
Net cash used in operating activities -
continuing operations
(23,015
)
(72,493
)
Net cash provided by operating activities
- discontinued operations
67,317
62,727
Net cash provided by (used in) operating
activities
44,302
(9,766
)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment and
demonstration units
(13,497
)
(14,037
)
Purchases of short-term investments
(512,642
)
(106,631
)
Proceeds from maturities of short-term
investments
264,160
277,749
Proceeds from sales of short-term
investments
—
28,208
Business acquisitions, net of cash
acquired
50
(6,284
)
Purchase of investment in privately held
company
—
(1,000
)
Lease deposits
725
34
Net cash provided by (used in) investing
activities - continuing operations
(261,204
)
178,039
Net cash used in investing activities -
discontinued operations
(10,039
)
(10,130
)
Net cash used in investing activities
(271,243
)
167,909
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of convertible senior notes
—
(96,392
)
Share repurchases
(68,334
)
$
—
Accretion of series A convertible
preferred stock
(9,073
)
—
Series A convertible preferred stock
8,993
—
Payment related to shares withheld for
taxes
(9,724
)
(8,039
)
Proceeds from employee stock purchase
plan
12,335
12,300
Proceeds from exercise of equity
awards
3,600
3,731
Net cash used in financing activities
(62,203
)
(88,400
)
Net change in cash and cash
equivalents
(289,144
)
69,743
Cash and cash equivalents, beginning of
period
676,454
334,603
Cash and cash equivalents, end of
period
$
387,310
$
404,346
FireEye, Inc.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
(Unaudited, in thousands,
except per share amounts)
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
GAAP operating loss
$
(84,510
)
$
(76,728
)
$
(157,376
)
$
(161,774
)
Stock-based compensation expense (1)
38,742
26,650
72,143
52,508
Amortization of stock-based compensation
capitalized in software development costs (3)
459
421
993
785
Amortization of intangible assets (2)
10,998
10,025
22,108
20,395
Transformation and transition expense
(9)
3,190
—
3,190
—
Restructuring charges (4)
1,927
12,558
1,927
18,775
Non-GAAP operating income (loss)
$
(29,194
)
$
(27,074
)
$
(57,015
)
$
(69,311
)
GAAP gross margin
44
%
45
%
46
%
43
%
Stock-based compensation expense (1)
9
%
7
%
8
%
7
%
Amortization of intangible assets (2)
6
%
6
%
6
%
6
%
Non-GAAP gross margin
59
%
58
%
60
%
56
%
GAAP operating margin
(74
)%
(79
)%
(69
)%
(85
)%
Stock-based compensation expense (1)
33
%
28
%
32
%
27
%
Amortization of stock-based compensation
capitalized in software development costs (3)
—
%
—
%
—
%
—
%
Amortization of intangible assets (2)
10
%
10
%
10
%
11
%
Transformation and transition expense
(9)
3
%
—
%
1
%
—
%
Restructuring charges (4)
2
%
13
%
1
%
10
%
Non-GAAP operating margin
(26
)%
(28
)%
(25
)%
(37
)%
GAAP net loss attributable to common
stockholders
$
(69,259
)
$
(53,275
)
$
(124,499
)
$
(129,581
)
Continuing operations:
Stock-based compensation expense (1)
38,742
26,650
72,143
52,508
Amortization of stock-based compensation
capitalized in software development costs (3)
459
421
993
785
Amortization of intangible assets (2)
10,998
10,025
22,108
20,395
Restructuring charges (4)
1,927
12,558
1,927
18,775
Non-cash interest expense related to
convertible senior notes (5)
11,523
12,002
22,907
24,367
Adjustment to provision (benefit) from
income taxes (6)
—
—
200
(315
)
Dividend on series A convertible preferred
stock (7)
4,563
—
9,075
—
Accretion of series A convertible
preferred stock (8)
—
—
82
—
Transformation and transition expense
(9)
3,190
—
3,190
—
Discontinued operations:
Non-GAAP adjustments for discontinued
operations (10)
19,980
11,905
36,279
29,234
Non-GAAP net income attributable to common
stockholders
$
22,123
$
20,286
$
44,405
$
16,168
GAAP net loss per share attributable to
common stockholders, basic and diluted
$
(0.29
)
$
(0.24
)
$
(0.53
)
$
(0.59
)
Continuing operations:
Stock-based compensation expense (1)
0.16
0.12
0.32
0.24
Amortization of stock-based compensation
capitalized in software development costs (3)
—
—
—
—
Amortization of intangible assets (2)
0.05
0.05
0.09
0.09
Restructuring charges (4)
0.01
0.06
0.01
0.09
Non-cash interest expense related to
convertible senior notes (5)
0.05
0.05
0.10
0.11
Adjustment to provision (benefit) from
income taxes (6)
—
—
—
—
Dividend on series A convertible preferred
stock (7)
0.02
—
0.04
—
Accretion of series A convertible
preferred stock (8)
—
—
—
—
Transformation and transition expense
(9)
0.01
—
0.01
—
Discontinued operations:
Non-GAAP adjustments for discontinued
operations (10)
0.08
0.05
0.15
0.13
Non-GAAP net income per share attributable
to common stockholders, basic and diluted
$
0.09
$
0.09
$
0.19
$
0.07
Weighted average shares used in per share
calculation for Non-GAAP, basic and diluted
237,279
221,352
236,016
219,570
(1) Includes stock-based compensation
expense as follows:
Cost of platform, cloud subscription and
managed services revenue
$
3,487
$
2,486
$
6,301
$
4,865
Cost of professional services revenue
6,135
4,171
11,321
7,748
Research and development expense
9,320
4,850
17,743
10,366
Sales and marketing expense
11,539
8,162
21,429
17,043
General and administrative expense
8,261
6,981
15,349
12,486
Total stock-based compensation expense
$
38,742
$
26,650
$
72,143
$
52,508
(2) Includes amortization of intangible
assets as follows:
Cost of platform, cloud subscription and
managed services revenue
$
7,025
$
6,313
$
14,137
$
12,971
Sales and marketing expense
3,973
3,712
7,971
7,424
Total amortization of intangible
assets
$
10,998
$
10,025
$
22,108
$
20,395
(3) Includes amortization of stock-based
compensation capitalized in software development costs as
follows:
Research and development expense
459
421
993
785
(4) Includes restructuring charges as
follows:
Restructuring charges
$
1,927
$
12,558
$
1,927
$
18,775
(5) Includes non-cash interest expense
related to convertible senior notes as follows:
Other income, net
$
11,523
$
12,002
$
22,907
$
24,367
(6) Includes income tax effect of non-GAAP
adjustments as follows:
Adjustment to provision (benefit) from
income taxes
$
—
$
—
$
200
$
(315
)
(7) Dividend on series A convertible
preferred stock
$
4,563
$
—
$
9,075
$
—
(8) Accretion of series A convertible
preferred stock
$
—
$
—
$
82
$
—
(9) Transformation and transition
expense
$
3,190
$
—
$
3,190
$
—
(10) Includes non-GAAP adjustments for
discontinued operations as follows:
Stock-based compensation expense
$
13,485
$
10,102
$
25,851
$
20,422
Amortization of intangibles
486
1,220
1,221
2,809
Amortization of stock-based compensation
capitalized in software development costs
543
583
1,081
1,246
Restructuring charges
—
—
—
4,757
Divestiture related costs
5,466
—
8,126
—
$
19,980
$
11,905
$
36,279
$
29,234
FireEye, Inc.
SUMMARY OF CONTINUING
OPERATIONS, DISCONTINUED OPERATIONS, AND COMBINED
OPERATIONS
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
(Unaudited, in thousands,
except per share amounts)
Three Months Ended June 30,
2021
Continuing
Discontinued
Combined
Revenue
$
113,910
$
134,045
$
247,955
Cost of revenue
63,525
28,001
91,527
Total gross profit
$
50,385
$
106,044
$
156,429
Research and development
$
40,930
$
28,665
$
69,595
Sales and marketing
63,018
36,886
99,904
General and administrative
29,020
5,466
34,486
Restructuring charges
1,927
—
1,927
GAAP operating income (loss)
$
(84,510
)
$
35,027
$
(49,483
)
Non-GAAP adjustments
55,316
19,980
75,296
Non-GAAP operating income (loss)
$
(29,194
)
$
55,007
$
25,813
Other income and expense, provision for
income tax & dividends on series A convertible preferred
stock
$
(19,194
)
$
(582
)
$
(19,776
)
Net loss attributable to common
stockholders
$
(103,704
)
$
34,445
$
(69,259
)
GAAP operating margin
(74
)%
26
%
(20
)%
Non-GAAP adjustments related to operating
income (loss)
48
%
15
%
30
%
Non-GAAP operating margin
(26
)%
41
%
10
%
Non-GAAP Adjustments:
Stock-based compensation expense
$
38,743
$
13,485
$
52,228
Amortization of intangible assets
10,997
486
11,483
Amortization of stock-based compensation
capitalized in software development costs
459
543
1,002
Restructuring charges
1,927
—
1,927
Divestiture related costs
—
5,466
5,466
Transformation and transition expense
3,190
—
3,190
Non-GAAP adjustments related to operating
income (loss)
$
55,316
$
19,980
$
75,296
Non-cash interest expense related to
convertible senior notes
$
11,523
$
—
$
11,523
Dividend on series A convertible preferred
stock
4,563
—
4,563
Accretion of series A convertible
preferred stock
—
—
—
Non-GAAP adjustments below operating
income (loss)
$
16,085
$
—
$
16,085
Total non-GAAP adjustments
$
71,402
$
19,980
$
91,382
GAAP net income (loss) per share
attributable to common stockholders, basic and diluted
$
(0.44
)
$
0.15
$
(0.29
)
Non-GAAP net income (loss) per share
attributable to common stockholders, basic and diluted
$
(0.14
)
$
0.23
$
0.09
Weighted average shares used in per share
calculation for non-GAAP, basic and diluted
237,279
237,279
237,279
Three Months Ended June 30,
2020
Continuing
Discontinued
Combined
Revenue
$
97,230
$
132,671
$
229,901
Cost of revenue
53,546
29,947
83,493
Total gross profit
$
43,684
$
102,724
$
146,408
Research and development
$
28,665
$
29,260
$
57,925
Sales and marketing
52,840
36,306
89,146
General and administrative
26,349
—
26,349
Restructuring charges
12,558
—
12,558
GAAP operating income (loss)
$
(76,728
)
$
37,158
$
(39,570
)
Non-GAAP adjustments
49,654
11,905
61,559
Non-GAAP operating income (loss)
$
(27,073
)
$
49,062
$
21,989
Other income and expense, provision for
income tax & dividends on series A convertible preferred
stock
$
(13,269
)
$
(437
)
$
(13,706
)
Net loss attributable to common
stockholders
$
(89,996
)
$
36,720
$
(53,276
)
GAAP operating margin
(79
)%
28
%
(17
)%
Non-GAAP adjustments related to operating
income (loss)
51
%
9
%
27
%
Non-GAAP operating margin
(28
)%
37
%
10
%
Non-GAAP Adjustments:
Stock-based compensation expense
$
26,650
$
10,102
$
36,752
Amortization of intangible assets
10,025
1,220
11,245
Amortization of stock-based compensation
capitalized in software development costs
421
583
1,004
Restructuring charges
12,558
—
12,558
Divestiture related costs
—
—
—
Transformation and transition expense
—
—
—
Non-GAAP adjustments related to operating
income (loss)
$
49,654
$
11,905
$
61,559
Non-cash interest expense related to
convertible senior notes
$
12,002
$
—
$
12,002
Dividend on series A convertible preferred
stock
—
—
—
Accretion of series A convertible
preferred stock
—
—
—
Non-GAAP adjustments below operating
income (loss)
$
12,002
$
—
$
12,002
Total non-GAAP adjustments
$
61,656
$
11,905
$
73,561
GAAP net income (loss) per share
attributable to common stockholders, basic and diluted
$
(0.41
)
$
0.17
$
(0.24
)
Non-GAAP net income (loss) per share
attributable to common stockholders, basic and diluted
$
(0.13
)
$
0.22
$
0.09
Weighted average shares used in per share
calculation for non-GAAP, basic and diluted
221,352
221,352
221,352
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