05-Aug-14 12:57 ET In Play FireEye 2Q14 earnings preview (34.88 +0.66) : FireEye (FEYE) is set to report 2Q14 earnings today after the bell (historically ~16:05) with a conference call to follow at 17:00. S&P Capital IQ consensus calls for loss per share of ($0.60) on revs of 90.18 mln (+22% y/y). Over the co's first three reporting periods, on average it beat EPS consensus by $0.03 while growing revs at 112%. Remember that FEYE, along with most other growth stocks, has underperformed the broad market over the 1H14. After co's 1Q earnings release, shares sold off nearly 10% in after-hours trading, but have since attempted to rebound, testing and failing to break above resistance at $40, and now trading in a high volume area ~$34.50.
FEYE guided for FY14 and 2Q14 in its last earnings press release:
For 2Q14 co issued upside rev guidance range of $89-91 mln vs consensus of $87.1 mln at the time; for EPS co issued downside guidance calling for a loss per share in the range of ($0.63-0.58) vs consensus at the time of ($0.51)
Billings are expected to be in a range of $108-112 mln
Gross Margin is expected in the range of 68-70%
For FY14 co raised rev guidance range to between $405-415 mln from prior range of $400-410 mln vs consensus of $407 at the time while issuing downside EPS guidance calling for a loss between ($2.30-2.10) from prior range of ($2.20-2.00) vs consensus at the time calling for a ($2.04) loss
Billing are expected to be between $550-570 mln from prior guidance range of $540-560 mln
Gross Margins expected to be in a range of 70-73%
Highlights from 1Q14 earnings release
Co reported inline EPS of ($0.53) on revs of $74 mln, above consensus calling for $71.66 mln
Billings were $99.2 mln vs guidance of $84-88 mln
Separately, co announced agreement to acquire privately-held nPulse Technologies, a network forensics co for ~$60 million in cash, and ~$10 mln stock consideration subject to the achievement of certain milestones.
Analyst commentary
Following the 1Q14 earnings release, the Street was fairly upbeat, with FBR Capital noting that while it ultimately believes the growth story is in the early innings of playing out, shares could potentially be volatile following the release; Topeka Capital Markets noted that the report was characterized by aggressive spending to expand the business and bolting on another acquisition; they believe co has chosen a different path for the short-term, namely, establishing a dominant market position before taking their foot off the gas.
On 7/16, Goldman resumed coverage of FEYE with a Buy rating and $42 tgt
Topeka Capital Markets noted on 7/7, while co will maintain its frenetic spending, resulting in losses for the next few years, firm is expecting the pace of spending to begin to moderate beginning in 2015. Remember that the estimated 143% increase in GAAP operating expenses for 2014 does reflect the inclusion of Mandiant since the beginning of the year, although there is no question that FireEye by itself is spending aggressively to solidify its position among the leaders in next generation security solutions. |
