November 3, 2016 / 8:15 PM / 4 years ago

FireEye revenue beats on strong demand for cloud services

(Reuters) - Cybersecurity firm FireEye Inc (FEYE.O) reported a higher-than- expected 12.6 percent rise in quarterly revenue, helped by strong demand for its cloud-based products.

The FireEye logo is seen outside the company's offices in Milpitas, California, December 29, 2014. REUTERS/Beck Diefenbach

FireEye’s shares jumped nearly 14 percent in after-hours trading on Thursday.

The company said billings - a closely watched indicator of future business - rose 2.3 percent to $215.4 million in the third quarter ended Sept. 30. That was above the average analyst estimate of $206.2 million, according to research firm FactSet StreetAccount.

FireEye, which provides web, email and malware security to businesses and governments, is moving to a software-as-a-service (SaaS) subscription based model from its traditional business that centered around the sale of physical boxes.

Revenue from the subscription and services business jumped 35.1 percent to $142.6 million in the quarter. The business accounted for more than three-quarters of the company’s total revenue, up from a little over half in the last year.

Concerns about cyber attacks by state-sponsored organizations on government agencies and businesses have increased this year.

FireEye CEO Kevin Mandia said the company was responding to state-sponsored intrusions from Russia.

“I think Russia’s operating at it’s fullest scale and scope right now, and for the first time in maybe 15 years, in my opinion, we’re responding to more state actor intrusions from Russia than in China,” Mandia told Reuters in an interview.

However, those intrusions were much smaller in scale and volume than what the company has seen from China in the past, he added.

The company marginally lowered the top end of its revenue forecast for the full year. It now expects $716-$722 million, compared with its prior forecast of $716-$728 million.

The company had lowered its revenue expectations in the last two quarters.

Cybersecurity spending has been more cautious this year as the threat and size of cyber attacks have diminished in comparison with those seen over the last two years.

FireEye said revenue rose to $186.4 million in the quarter from $165.6 million a year earlier.

Net loss attributable to FireEye shareholders narrowed to $123.4 million, or 75 cents per share, in the third quarter from $135.5 million, or 88 cents per share.

Excluding items, the company lost 18 cents per share.

Analysts’ on average had expected revenue of $182.6 million and an adjusted loss of 31 cents, according to Thomson Reuters I/B/E/S.

Up to Thursday’s close of $11.01, the company’s shares had fallen 46.9 percent this year.

Reporting by Narottam Medhora in Bengaluru; Editing by Savio D'Souza

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