Tag Archives: feye

FireEye Sees Profits In 2017 Amid Key Subscription, SaaS Transition

FireEye ( FEYE ) delivered a lofty promise Tuesday — profitability in 2017. The No. 7 cybersecurity firm (by market cap), FireEye hasn’t been in the black yet. But FireEye’s transition to a software-as-a-service subscription model could de-emphasize the competitively pressured appliance market, a William Blair analyst said Wednesday — a day after FireEye unveiled its plans and gave its profit forecast at its annual analyst day. FireEye stock was up 1% in afternoon trading on the stock market today , after earlier rising 10%. Shares fell 4.6% Tuesday despite the guidance. On Wednesday, Piper Jaffray analyst Andrew Nowinski upgraded FireEye stock to overweight from neutral, and was among at least four analysts to boost their price targets. “We believe FireEye can successfully transition to a (SaaS) model,” Nowinski wrote in a research report. “We believe FireEye is well-positioned to execute this transition due to the company’s best-in-class intelligence gathering capabilities. “No other vendor can capture a complete intelligence package like FireEye, since they lack the Mandiant and iSight capabilities.” By 2020, subscriptions and SaaS offerings will comprise 75% of total billings, FireEye executives promised Tuesday. On that path to profitability, FireEye curbed its 2016 loss expectations to $1.20-$1.27 per share, ex items. The company also slashed its capital 2016 expenditures expectations by $15 million to $35 million. Long term, FireEye expects to boost its international sales from 30% of total revenue in 2015 to nearly 50% by leveraging third-party distributors like Westcon, a key distributor that helped scale Palo Alto Networks ’ ( PANW ) international revenue, Nowinski wrote. Shifting From Core Appliance As it transitions to the “more defensible” subscription and SaaS model, FireEye is de-emphasizing its appliance offerings. Combined, FireEye’s four core appliance products comprise only 27% of billings, William Blair analyst Jonathan Ho wrote in a report. “Instead, the company sees growth in new business lines such as FireEye-as-a-Service, Email Threat Prevention, Threat Analytics Platform and Mobile Threat Protection, which appear more defensible than the core business,” he wrote. Guidance suggests that FireEye can achieve profitability while still investing in these growth areas, Ho said, retaining his outperform rating on FireEye stock. But Dougherty analyst Catharine Trebnick questioned whether FireEye can deliver on its subscription and SaaS goals given tough comparisons. In 2015, subscription billings jumped 42% year over year. “This was largely driven by unattached subscription growth of 64% year over year, while attached grew at 29% year over year,” she wrote in a report. For 2016, FireEye guided to 70% unattached subscription growth. Excluding the iSight and Invotas acquisitions, however, that signals only 26% organic growth. “The company needs products from this section to be the leading edge of growth,” she wrote. “Looking beyond 2016, the company’s to-be-released advancements may be able to accelerate this figure.” Trebnick retained her neutral rating “until we can observe meaningful progress trickle down into the field.” Turning On The Cash Spigot FireEye expects its first profitable quarter in Q4 2017, and its first profitable year in 2018. Pacific Crest analyst Rob Owens, however, questioned the logic of transitioning both profit and product-mix simultaneously. “We believe a simultaneous mix shift and profitability initiative create incremental risk, particularly given recent execution,” he wrote in a report. But, he noted, the product shift should give more visibility into FireEye’s revenue stream. In 2015, FireEye-as-a-Service delivered triple-digit customer growth, reaching a $100-million run rate. FireEye now has 363 FaaS customers, up 101% and comprising 8% of the total 4,400 customers, FBN analyst Shebly Seyrafi wrote in a report. He sees “ample headroom for further penetration” in the FaaS market. About half of FireEye’s customers use multiple families of products, Trebnick noted separately. Seyrafi boosted his price target on FireEye stock to 25 from 18 and retained his outperform rating.

FireEye Curbs 2016 Loss Expectations, But Stock Still Tumbles

FireEye ( FEYE ) curbed its loss expectations for 2016 by a nickel at the midpoint of its guidance range as the cybersecurity firm slashed its capital expenditures view by $15 million, but its shares still fell. FireEye stock was down 2.5%, near 18, in afternoon trading on the stock market today , after shares had risen for nine straight trading days. Shares edged up last week during the cybersecurity RSA Conference in San Francisco. At the conference, FireEye announced a partnership with agent-less vendor ForeScout Technologies and unveiled an endpoint exploit-protection product. And its $275 million iSight Partners acquisition is already bearing fruit, FireEye executives told IBD. Tuesday, FireEye cut its 2016 capital expenditures view to $35 million vs. its earlier guidance for $50 million. FireEye sees $1.20 to $1.27 losses per share ex items, trimming earlier views for $1.25 to $1.32. FireEye reiterated sales guidance for $815 million to $845 million, which would be up 33% vs. 2015. FireEye retained its billings ex items guidance for $975 million to $1.055 billion. The consensus of 34 analysts polled by Thomson Reuters expected $829.9 million in sales and a per-share loss ex items of $1.30. Positive cash flow is still expected to come in at $70 million to $80 million, FireEye said. The updated guide comes as FireEye kicks off its 2016 analyst briefing. IBD’s 25-company Computer Software-Security industry group, which ranks a lowly No. 177 out of 197 groups, was down 1% Tuesday afternoon. FireEye stock has a low IBD Composite Rating of 17 out of a possible 99. Verisign ( VRSN ), Palo Alto Networks ( PANW ) and Check Point Software Technology ( CHKP ) stocks lead the group with CRs of 84, 79 and 73, respectively.

Palo Alto Networks Wins ‘Bake-Offs’ Against Cisco, Check Point

Proofpoint ( PFPT ) rebuffed Wall Street concerns that tech spending has slowed this quarter, Piper Jaffray analyst Andrew Nowinski wrote Monday, following last week’s 40,000-attendance cybersecurity RSA Conference in San Francisco. Fears of a tech spending depression slugged IBD’s 25-company Computer Software-Security industry group after dismal outlooks by Tableau Software ( DATA ) and LinkedIn ( LNKD ) last month. The group hit a 20-month low on Feb. 9 but has since risen 31%. A weak spending outlook did not play out at RSA, Nowinski and William Blair analyst Jonathan Ho wrote Monday in separate research reports. “(Proofpoint) management said they are seeing ‘absolutely no change in the buying environment,’” Nowinski wrote. “Based on our meetings at the conference, we believe demand trends in Q1 have remained strong through the first two months of the year.” Endpoint Pits Symantec, FireEye, IBM Trending buzzwords include endpoint security, internal access management and privileged account management, Nowinski wrote. Symantec ( SYMC ), FireEye ( FEYE ) and IBM ( IBM ) (via a partnership with Carbon Black) compete in the endpoint market. Industry tracker IDC sees endpoint security revenue reaching $4.6 billion in 2016, up 5.4% and accelerating from 2% year-over-year growth in 2015, Nowinski wrote. Despite a marketing refresh, Symantec will struggle against “rapidly growing next-generation endpoint vendors that have demonstrated stronger solutions,” Ho predicted. FireEye, on the other hand, bolstered its threat-prevention capabilities by adding exploit detection to its endpoint. IDC also expects internal access management revenue to reach $5.9 billion in 2016 and grow at an 8% compound annual growth rate through 2019. Within that sector, privileged account management will comprise $550 million, growing at a 10.6% CAGR over the next four years, Ho says. CyberArk Software ( CYBR ) rivals Centrify in the identity access management ring, Nowinski wrote. But Centrify’s tools for securing both privileged accounts and end-user identity give it a broader portfolio than CyberArk, he wrote. During RSA, CyberArk released a new version of its privileged threat analytics system, aimed at stopping “Golden Ticket” attacks which exploit privileged credentials in Microsoft ( MSFT ) domain-level administrator accounts, Ho wrote. Ho also noted that a platform focus continues to buoy Palo Alto Networks ( PANW ), which he says still wins “bake-offs” against Cisco Systems ( CSCO ), Check Point Software Technologies ( CHKP ) and Juniper Networks ( JNPR ). But Check Point’s software-based firewall could be a game changer, he wrote. “Check Point’s software-based firewall appears better positioned than competitors for the upcoming shift to third-party cloud architectures such as AWS ( Amazon ( AMZN ) Web Service) and (Microsoft) Azure,” he said. ‘Spending Has Not Weakened’ Ultimately, the RSA Conference quelled concerns of slowing spending and lengthening sales cycles, Ho wrote. RSA saw 70 first-time exhibitors, giving it 500 companies at the event, and more than 20% growth from 33,000 attendees in 2015. “We observed continued excitement over the space and a strong appetite for new solutions, consistent with prior years,” Ho wrote. “Our discussions with private and public companies suggest that the environment remains robust and that security spending has not weakened near term.” Overall themes included the burgeoning Internet of Things market, encryption, third-party cloud security, identity/access management as-a-service, real-time visibility, next-generation endpoint security, automation/orchestration and leveraging Big Data analytics, Ho wrote. “The conference reinforced our view that the companies best positioned to benefit from increased spending are those that offer innovative next-generation approaches that will see rapid growth in investment,” he wrote. Customers are looking at cost, manageability and vendor consolidation, Ho wrote.