Billings and revenue growth expected to accelerate as combined
technologies, intelligence and expertise increase customers’
resilience to cyber attacks and improve return on security
investments
FireEye, Inc. (NASDAQ: FEYE), the intelligence-led security
company, today announced the acquisition of Verodin, the leader in
validating the effectiveness of cyber security controls. The
transaction closed today and is valued at approximately $250
million in cash and stock, net of acquired net cash and excluding
assumed unvested options, based on the closing price of FireEye’s
common stock on May 24, 2019. The combination is expected to be
accretive to revenue, cash flow from operations and non-GAAP
operating income in 2020, and add approximately $20 million to
billings in 2019 and more than $70 million to billings in 2020.
The Verodin Security Instrumentation Platform adds significant
new capabilities to the FireEye portfolio by identifying gaps in
security effectiveness due to equipment misconfiguration, changes
in the IT environment, evolving attacker tactics, and more.
Equipped with FireEye frontline intelligence, the Verodin platform
will measure and test security environments against both known and
newly discovered threats, empowering organizations to identify
risks in their security controls before a breach occurs, and
rapidly adapt their defenses to the evolving threat landscape.
“Security effort does not equal security effectiveness. That is
why security-conscious customers red-team their networks – they
need the unvarnished truth of how effective their security programs
are. Verodin gives us the ability to automate security
effectiveness testing using the sophisticated attacks we spend
hundreds of thousands of hours responding to, and provides a
systematic, quantifiable, and continuous approach to security
program validation,” said Kevin Mandia, chief executive officer at
FireEye. “We believe there is no better way to train people and
instrument better security than by continually attacking the
environment and adapting security controls to the real threats.
Finally, organizations will have a reliable and consistent way to
quantify cyber risk in a manner understandable to frontline
technicians and in the Board room.”
“Cyber security today is based on assumptions – that
technologies work as vendors claim, products are deployed and
configured correctly, processes are fully effective, and changes to
the environment are properly understood, communicated and
implemented. However, the reality is much different for almost
every organization and often they discover this only after being on
the wrong side of a breach,” said Chris Key, Verodin co-founder and
chief executive officer prior to the acquisition. “By joining
FireEye, Verodin extends its ability to help customers take a
proactive approach to understanding and mitigating the unique
risks, inefficiencies and vulnerabilities in their
environments.”
The Verodin platform complements existing cyber security
products and technology-enabled services. Verodin will integrate
with FireEye® Helix™ security orchestration capabilities to help
customers prioritize and automate continuous improvement of
security controls. Customers will also be able to implement Verodin
cyber security measurement and validation solutions “as-a-service”
through the FireEye Managed Defense service and as an Expertise On
Demand automated service.
Verodin solutions will continue to be available on a standalone
basis through Verodin resellers, as well as through the global
community of FireEye channel partners.
Acquisition-related Update to Q2 and 2019 Outlook and
Preliminary 2020 Impact
Based on the company’s preliminary evaluation of the Verodin
business and the anticipated impact of purchase accounting on
Verodin deferred revenue balances, guidance ranges for the second
quarter and full year 2019 have been updated to reflect the
acquisition.
Additionally, FireEye currently expects the acquisition of
Verodin to contribute over $70 million to 2020 billings and be
accretive to 2020 revenue, cash flow and non-GAAP operating
income.
For the second quarter of 2019, FireEye currently expects:
- Revenue in the range of $213 million to
$217 million.
- Billings in the range of $207 million
to $222 million.
- Non-GAAP gross margin as a percent of
revenue in the range of 74 percent to 75 percent.
- Non-GAAP operating margin as a percent
of revenue in the range of 0 percent to 2 percent.
- Non-GAAP net income per diluted share
between $0.00 and $0.02.
- Cash flow generated by operations
between negative $7 million and negative $12 million.
Non-GAAP net income per diluted share for the second quarter
assumes interest income on cash and cash equivalents and short-term
investments will offset cash interest expense associated with the
company’s convertible senior notes, provision for income taxes of
between $1.5 million and $2.0 million, and weighted average diluted
shares outstanding of approximately 210 million.
For 2019, FireEye currently expects:
- Revenue in the range of $890 million to
$900 million.
- Billings in the range of $935 million
to $955 million.
- Non-GAAP gross margin as a percent of
revenue of approximately 75 percent.
- Non-GAAP operating margin as a percent
of revenue between 4 percent and 5 percent.
- Non-GAAP net income per diluted share
between $0.12 and $0.16.
- Cash flow generated by operations
between $95 million and $115 million.
Non-GAAP net income per diluted share for 2019 assumes interest
income on cash and cash equivalents and short-term investments will
offset cash interest expense associated with the company's
convertible senior notes, provision for income taxes of between $6
million and $8 million, and weighted average diluted shares
outstanding of approximately 215 million.
Guidance for non-GAAP financial measures excludes stock-based
compensation, amortization of stock-based compensation expense
capitalized in software development costs, amortization of
intangible assets, non-cash interest expense related to the
company’s convertible senior notes, and other non-recurring items.
A reconciliation of non-GAAP guidance measures to corresponding
GAAP measures is not available on a forward-looking basis due to
the uncertainty regarding, and the potential variability of, the
amounts of stock-based compensation expense, amortization of
intangible assets, and 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 are
difficult to predict and subject to constant change. The actual
amount of stock-based compensation in the second quarter of 2019
and full year 2019 will have a significant impact on the company’s
GAAP operating margin and net loss per share. Further, amortization
of intangible assets, as well as other non-recurring expenses, if
any, will also impact results. Accordingly, a reconciliation of the
non-GAAP financial measure guidance to the corresponding GAAP
measures for future periods is not available without unreasonable
effort.
Conference Call Information
FireEye will host a conference call today, May 28, 2019, at 5
p.m. Eastern time (2 p.m. Pacific time) to discuss the acquisition.
Interested parties may access the conference call by dialing
877-312-5521 (domestic) or 678-894-3048 (international). A live
audio webcast of the call can be accessed from the Investor
Relations section of the company’s website at
investors.fireeye.com. An archived version of the webcast will be
available at the same website shortly after the conclusion of the
live event.
Forward-Looking Statements
This press release contains forward-looking statements,
including statements regarding the expectations, beliefs, plans,
intentions and strategies of FireEye relating to FireEye’s
acquisition of Verodin; the capabilities and benefits of Verodin
solutions; expected benefits to FireEye, Verodin and their
respective customers; future offerings; the financial impact of the
acquisition on FireEye; and expectations for future financial
results in the section entitled “Acquisition-related Update to Q2
and 2019 Outlook and Preliminary 2020 Impact” above.
These forward-looking statements involve risks and
uncertainties, as well as assumptions which, if they do not fully
materialize or prove incorrect, could cause FireEye’s results to
differ materially from those expressed or implied by such
forward-looking statements. The risks and uncertainties that could
cause FireEye’s results to differ materially from those expressed
or implied by such forward-looking statements include the failure
to achieve expected synergies and efficiencies of operations
between FireEye and Verodin; the ability of FireEye and Verodin to
successfully integrate their respective market opportunities,
technology, products, personnel and operations; the failure to
timely develop and achieve market acceptance of combined products
and services; the potential impact on the business of Verodin as a
result of the acquisition; the loss of any Verodin customers; the
ability to coordinate strategy and resources between FireEye and
Verodin; the ability of FireEye and Verodin to retain and motivate
key employees of Verodin; customer demand and adoption of FireEye’s
products and services; real or perceived defects, errors or
vulnerabilities in FireEye's or Verodin’s products or services; any
delay in the release of FireEye's or Verodin’s new products or
services; FireEye's ability to react to trends and challenges in
its business and the markets in which it operates; FireEye's
ability to anticipate market needs or develop new or enhanced
products and services to meet those needs; FireEye’s ability to
hire and retain key executives and employees; FireEye’s ability to
attract new and retain existing customers and train its sales
force; the budgeting cycles, seasonal buying patterns and length of
FireEye’s sales cycle; risks associated with new offerings; sales
and marketing execution risks; the ability of FireEye and its
partners to execute their strategies, plans, objectives and
expected investments with respect to FireEye’s partnerships; and
general market, political, economic, and business conditions, as
well as those risks and uncertainties included under the captions
“Risk Factors” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in FireEye’s Form
10-Q filed with the Securities and Exchange Commission on May 3,
2019, which should be read in conjunction with these financial
results and is available on the Investor Relations section of
FireEye’s website at investors.fireeye.com and on the SEC website
at www.sec.gov.
All forward-looking statements in this press release are based
on information available to the company as of the date hereof, and
FireEye does not assume any obligation to update the
forward-looking statements provided to reflect events that occur or
circumstances that exist after the date on which they were made,
except as required by law. Any future product, service, feature, or
related specification that may be referenced in this release is for
informational purposes only and is not a commitment to deliver any
offering, technology or enhancement. FireEye reserves the right to
modify future product or service plans at any time.
About FireEye, Inc.
FireEye is the intelligence-led security company. Working as a
seamless, scalable extension of customer security operations,
FireEye offers a single platform that blends innovative security
technologies, nation-state grade threat intelligence, and
world-renowned Mandiant® consulting. With this approach, FireEye
eliminates the complexity and burden of cyber security for
organizations struggling to prepare for, prevent, and respond to
cyber attacks. FireEye has over 7,900 customers across 103
countries, including more than 50 percent of the Forbes Global
2000.
© 2019 FireEye, Inc. All rights reserved. FireEye, Mandiant and
Helix are registered trademarks or trademarks of FireEye, Inc. in
the United States and other countries. All other brands, products,
or service names are or may be trademarks or service marks of their
respective owners.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190528005716/en/
Media Inquiries:Dan WireFireEye,
Inc.Media.Relations@FireEye.com415-895-2101
Investor Inquiries:Kate PattersonFireEye,
Inc.Investor.Relations@FireEye.com408-321-4957
FireEye (NASDAQ:FEYE)
Historical Stock Chart
From Apr 2024 to May 2024
FireEye (NASDAQ:FEYE)
Historical Stock Chart
From May 2023 to May 2024