MILPITAS, CA — (Marketwired) — 08/04/16 — FireEye, Inc. (NASDAQ: FEYE), the leader at stopping today’s advanced cyber attacks, today announced financial results for the second quarter ended June 30, 2016.

“Our second quarter results showed fundamental strength in several areas — sales of our next generation endpoint offering increased more than 65 percent from a year ago, renewal billings were strong, we added more than 300 new customers, and we closed 40 transactions above $1 million,” said Kevin Mandia, FireEye chief executive officer. “Although total billings and revenue were below our expectations, efforts to optimize our cost structure resulted in a sequential decline in our costs and loss per share exceeded our expectations.”

“I believe FireEye has competitive advantages that will help re-invigorate our growth and deliver shareholder value in the future,” added Mandia. “Our MVX advanced threat detection engine, powered by our threat intelligence, leads the industry in high fidelity detection of unknown threats. Our global infrastructure allows us to deliver FireEye as a Service to customers around the world, and the expertise of our security consultants positions us as a trusted advisor to organizations and governments. As we introduce the latest versions of FireEye products, improve sales execution, and continue to optimize our costs, I believe we will see steady improvement in our performance. We still have much work to do, but I am convinced that FireEye has the critical assets necessary for long term success, and that we are taking additional steps to achieve balanced growth and profitability.”

Second Quarter 2016 Financial Results

• Revenue of $175.0 million, an increase of 19 percent from the second quarter of 2015.
• Billings of $196.4 million, an increase of 10 percent from the second quarter of 2015.1
• GAAP operating margin of negative 73 percent, compared to negative 87 percent in the second quarter of 2015.
• Non-GAAP operating margin of negative 28 percent, compared to negative 41 percent in the second quarter of 2015.1
• GAAP net loss per share of $0.86, compared to GAAP net loss per share of $0.87 in the second quarter of 2015.
• Non-GAAP net loss per share of $0.33, compared to a non-GAAP net loss per share of $0.41 in the second quarter of 2015.1
• Cash flow from operations of negative $13.1 million, compared to cash flow from operations of $39.1 million in the second quarter of 2015.

1 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.”

“Continued focus on optimizing our cost structure resulted in a $17 million sequential decline in total non-GAAP costs in the second quarter compared to the first quarter of 2016. This discipline allowed us to deliver our best non-GAAP operating margin performance since the third quarter of 2012 and achieve second quarter non-GAAP net loss per share six cents better than the mid-point of our previously issued guidance range,” said Michael Berry, FireEye executive vice president, chief financial officer and chief operating officer. “We are taking additional measures in the third quarter to reduce our costs and align our operations with our growth, and we remain committed to our goal of achieving non-GAAP profitability by the fourth quarter of 2017,” added Berry.

Third Quarter and Updated 2016 Outlook
FireEye provides guidance based on current market conditions and expectations. For the third quarter of 2016, FireEye expects:

• Total revenue in the range of $180 to $186 million.
• Non-GAAP billings in the range of $200 to $215 million.
• Non-GAAP operating margin of approximately negative 25 to negative 27 percent of revenue.
• Non-GAAP net loss per share of $0.30 to $0.32.

Non-GAAP net loss per share for the third quarter assumes interest expense of approximately $3.0 million associated with the company’s convertible senior notes, provision for income taxes of between $1.0 and $2.0 million, and weighted average shares outstanding of approximately 164 million.

For 2016, FireEye now expects:

• Total revenue in the range of $716 to $728 million.
• Non-GAAP billings in the range of $835 to $855 million.
• Non-GAAP operating margin in the range of negative 26 to negative 28 percent of revenue.
• Non-GAAP net loss per share of $1.28 to $1.32.

Non-GAAP operating margin for 2016 assumes a reduction in total non-GAAP costs of at least $20 million in the fourth quarter of 2016 resulting from additional restructuring activities in the third quarter. Non-GAAP net loss per share for 2016 assumes interest expense of $12.1 million associated with the company’s convertible senior notes, provision for income taxes of between $5.0 and $7.0 million and weighted average shares outstanding of approximately 163 million.

Guidance for non-GAAP financial measures excludes stock based compensation, amortization of intangible assets, acquisition-related expenses, restructuring charges, changes in fair value of contingent earn-out liabilities, non-cash interest expense related to the company’s convertible senior notes, and other non-recurring expenses. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis as a result of the uncertainty regarding, and the potential variability of, the amounts of stock-based compensation expense, amortization of intangible assets, and other 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 is difficult to predict and subject to constant change. The actual amount of stock-based compensation in the third quarter of 2016 and the remainder of 2016 will have a significant impact on the company’s GAAP operating margin and net loss per share. Accordingly, a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measures is not available without unreasonable effort.