FireEye Plunges 11% On Wider Q1 Loss, Weak Outlook; To Buy Privately-held NPulse

(RTTNews) - Shares of FireEye, Inc. (FEYE) plunged more than 11 percent in extended trading on Tuesday after the cybersecurity provider issued weak outlook for the second quarter, and raised its loss expectation for the full-year 2014.

The company also reported a loss for the first quarter that sharply widened from last year, despite strong double-digit revenue growth, reflecting sharply higher operating expenses. However, adjusted loss per share matched analysts' expectations, and quarterly revenues topped their estimates.

FireEye provides automated threat forensics and dynamic malware protection against the next generation of cyber attacks. The company has invented a purpose-built, virtual machine-based platform that provides real-time threat protection. It has over 1,000 customers across more than 40 countries.

Separately, FireEye said it agreed to acquire privately-held nPulse Technologies, an innovator in network security forensics. It will pay about $60 million in cash, and issue about $10 million stock as consideration. The deal is expected to close during the second quarter of 2014.

The company noted that nPulse network forensics platform will be combined with Mandiant endpoint forensics to deliver the industry's only unified Enterprise Forensics solution for visibility into the entire attack life cycle -- from network intrusion to endpoint exploitation and lateral movement.

The company in December 2013 had acquired privately-held Mandiant, the leading provider of advanced endpoint security products and security incident response management solutions.

"We are off to a strong start in 2014, with billings and revenue above our guidance," Chairman and CEO David DeWalt said in a statement.

The Milpitas, California-based malware protection system company reported a net loss of $101.21 million or $0.76 per share for the first quarter, compared to $26.96 million or $1.78 per share in the prior-year quarter.

Excluding items, adjusted net loss for the quarter was $71.41 million or $0.53 per share, compared to a loss of $21.28 million or $1.40 per share in the year-ago quarter.

On average, 20 analysts polled by Thomson Reuters expected the company to report a loss of $0.53 per share for the quarter. Analysts' estimates typically exclude special items.

Results for the latest quarter were based on 134.0 million weighted average shares outstanding, while the year-ago quarter was based on 15.2 million weighted average shares outstanding.

Total revenues for the quarter surged to $73.98 million from $28.42 million in the same quarter last year, and topped seventeen Wall Street analysts' consensus estimate of $71.65 million.

Product revenue for the quarter surged to $24.25 million from $14.99 million in the prior-year quarter, as well as subscription and services revenue soared to $49.73 million from $13.43 million last year.

First quarter billings totaled $99.2 million, higher than $42.80 million last year. Deferred revenue totaled $212.7 million at the end of the first quarter.

Total operating expenses more than tripled to $145.92 million from $45.94 million in the year-ago quarter. Looking ahead to the second quarter, the company expects adjusted loss in a range of $0.58 to $0.63 per share, on projected revenues between $89 million and $91 million, and billings between $108 million and $112 million, while analysts are looking for a loss of $0.51 per share on revenues of $87.90 million.

For fiscal 2014, the company now anticipates adjusted loss in the range of $2.10 to $2.30 per share, on projected revenues between $405 million and $415 million, and billings between $550 million and $570 million.

Street is currently looking for a full-year 2014 loss of $2.04 per share on annual revenues of $407.07 million.

Earlier, the company projected a loss of $2.00 to $2.20 per share and revenues of $400 million to $410 million, with billings between $540 million and $560 million.

"We are changing the game again and creating the new category of enterprise security forensics with our pending acquisition of nPulse. Like FireEye and Mandiant, nPulse is a pioneer and innovator in cybersecurity, and we are looking forward to welcoming the team to the FireEye family," DeWalt added.

FEYE closed Tuesday's regular trading session at $37.13, down $3.10 or 7.71% on a volume of 6.42 million shares. The stock plunged a further $4.12 or 11.10% in after-hours trading.