Cyber security firm FireEye posts surprise rise in revenue

(Reuters) - Cyber security firm FireEye Inc reported a surprise 3.4 percent rise in quarterly revenue, helped by strength in its product subscription and services business.

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

FireEye’s shares jumped 13.8 percent to $13.90 after the bell on Tuesday.

The company’s billings, a closely watched indicator of future business, fell 18 percent to $152.4 million in the first quarter, compared with a fall of 14 percent in the previous quarter.

However, billings in the latest quarter beat analysts’ estimates of $142.5 million, according to financial data and analytics firm FactSet.

FireEye expects billings of $173 million-$179 million in the second quarter, above analysts’ estimate of $170.9 million.

The company is amid a transition to a software-as-a-service model (SaaS) from its traditional business that centered around the sale of hardware boxes.

“The revenue level looks like it could be stabilizing, you’re probably seeing a change in complexion of the revenue towards more subscription and services,” Wedbush Securities analyst Steve Koenig said.

FireEye remains confident of renewed growth in the second half of 2017, helped by the introduction of products such as the Helix platform, which combines network processing and analytics with endpoint analytics.

“We fully expect in the fourth quarter that we’re going to be non-GAAP profitable, and then you would expect that to be the case from 2018 on,” FireEye Chief Financial Officer Frank Verdecanna said in an interview on Tuesday.

The Milpitas, California-based company also forecast revenue of $173 million to $179 million for the current quarter. Analysts on average were expecting revenue of $173.31 million, according to Thomson Reuters I/B/E/S.

FireEye, which provides web, email and malware security to businesses and governments, said its revenue rose to $173.7 million in the quarter ended March 31, from $168 million in the year-earlier period.

Analysts on average had expected revenue to fall about 2.6 percent to $163.7 million.

Net loss attributable to the company’s shareholders narrowed to $83 million, or 48 cents per share, from $155.9 million, or 98 cents per share.

Excluding items, FireEye reported a loss of 9 cents per share. Analysts were expecting a loss of 26 cents.

Through Tuesday’s close, the stock had risen 2.6 percent, underperforming the 10.8 percent gain in the broader Nasdaq Composite index.

Reporting by Narottam Medhora in Bengaluru; Editing by Maju Samuel and Martina D’Couto