FireEye Reports Record Revenue for Fourth Quarter and Full Year 2017

FireEye, Inc. announced financial results for the fourth quarter and fiscal year ended December 31, 2017.

"We achieved strong results across all key financial metrics in the fourth quarter and delivered against our year-long commitment of billings and revenue growth, non-GAAP operating profitability, and positive operating and free cash flow by the fourth quarter," said Kevin Mandia, FireEye chief executive officer. "We delivered year-over-year and sequential growth in every major product group and geographic region, and we closed a record number of transactions greater than $1 million."

"We are building FireEye for the long-term, and we begin 2018 with a solid foundation for future growth and increased profitability," added Mandia. "The combination of our expertise on the front lines, our threat intelligence, and our machine-generated cyber attack data gives us greater visibility into the threat environment than any other security company. I believe this is a sustainable competitive advantage for us. We leverage our unique insights in our continuous innovation cycle that allows us to rapidly adapt our solutions, deliver expertise on demand, and remain relevant for our customers as the threat landscape evolves."

Fourth Quarter 2017 Financial Results

• Revenue of $202.3 million, an increase of 10 percent from the fourth quarter of 2016, and above the guidance range of $190 million to $196 million.
• Billings of $242.2 million, an increase of 9 percent from the fourth quarter of 2016, and above the guidance range of $210 million to $230 million.¹
• GAAP gross margin of 66 percent, compared to 65 percent in the fourth quarter of 2016.
• Non-GAAP gross margin of 75 percent, compared to 74 percent in the fourth quarter of 2016, and consistent with guidance of approximately 75 percent.¹
• GAAP operating margin of negative 33 percent, compared to negative 27 percent in the fourth quarter of 2016.
• Non-GAAP operating margin of positive 1 percent, compared to negative 1 percent in the fourth quarter of 2016, and consistent with the guidance range of approximately negative 1 percent to positive 1 percent.¹
• GAAP net loss per share of $0.42, compared to a GAAP net loss per share of $0.37 in the fourth quarter of 2016.
• Non-GAAP net income per share of $0.01, compared to a non-GAAP net loss per share of $0.03 in the fourth quarter of 2016, and better than the guidance range of non-GAAP net loss per share of $0.00 to $0.03.¹
• Cash flow generated by operations was $33.6 million, compared to cash flow generated by operations of $6.9 million in the fourth quarter of 2016, and better than the guidance range of $16 million to $25 million. Cash flow generated by operations in the fourth quarter of 2017 was reduced by a payment of $12.5 million in net legal settlement costs.

2017 Financial Results

• Revenue of $751.1 million, an increase of 5 percent from 2016, and above the guidance range of $739 million to $745 million.
• Billings of $768.3 million, a decrease of 6 percent from 2016, and above the guidance range of $736 million to $756 million.¹
• GAAP gross margin of 64 percent, compared to 62 percent in 2016.
• Non-GAAP gross margin of 74 percent, compared to 73 percent in 2016.¹
• GAAP operating margin of negative 34 percent, compared to negative 62 percent in 2016.
• Non-GAAP operating margin of negative 3 percent, compared to negative 21 percent in 2016.¹
• GAAP net loss per share of $1.71, compared to a GAAP net loss per share of $2.94 in 2016.
• Non-GAAP net loss per share of $0.16, compared to a non-GAAP net loss per share of $0.99 in 2016, and equal to the low end of the non-GAAP net loss per share guidance range of $0.16 to $0.19.¹
• Cash flow generated by operations was $17.6 million, compared to cash flow used in operations of $14.6 million in 2016, and better than the guidance range for cash flow generated by operations of $1 million to $10 million. Cash flow generated by operations in 2017 was reduced by a payment of $12.5 million in net legal settlement costs.

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."

First Quarter and 2018 Outlook

FireEye provides guidance based on current market conditions and expectations. First quarter and full year 2018 guidance ranges reflect the adoption of ASC 606.

For the first quarter of 2018, FireEye currently expects

• Total revenue in the range of $192 million to $197 million.
• Billings in the range of $165 million to $175 million.
• Non-GAAP gross margin of approximately 74 percent.
• Non-GAAP operating margin of approximately negative 2 percent to negative 4 percent.
• Non-GAAP net loss per share of $0.03 to $0.06.
• Cash flow generated by operations between zero dollars and negative $10 million.

Non-GAAP net loss per share for the first quarter assumes cash interest expense of approximately $3 million associated with the company's convertible senior notes, provision for income taxes of between $1.0 million and $1.5 million, and weighted average shares outstanding of approximately 186 million.

For 2018, FireEye currently expects

• Revenue in the range of $815 million to $825 million.
• Billings in the range of $810 million to $830 million.
• Non-GAAP operating margin between 1 percent and 2 percent.
• Non-GAAP net income per share between $0.00 and $0.04.
• Positive cash flow generated by operations of $45 million to $55 million.
• Capital expenditures between $35 million and $40 million, including approximately $12 million in capital expenditures associated with the relocation of the company's headquarters to a new building in January 2018.

Non-GAAP net income per share for 2018 assumes cash interest expense of approximately $12.1 million, paid semi-annually in June and December, associated with the company's convertible senior notes, provision for income taxes of between $5.0 million and $6.0 million, and diluted weighted average shares outstanding of approximately 197 million.

Guidance for non-GAAP financial measures excludes stock based compensation, amortization of intangible assets, and non-cash interest expense related to the company's convertible senior notes. 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 is difficult to predict and subject to constant change. The actual amount of stock-based compensation in the first quarter of 2018 and full year 2018 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 is not available without unreasonable effort.

2018 Analyst Day Scheduled for March 1st

The company has scheduled its 2018 Analyst Day for March 1, 2018, with management presentations beginning at 8:30 a.m. Pacific time. A live audio webcast of the call, as well as related multi-media content, will be available on the Investor Relations section of the company's website at http://investors.fireeye.com/events.cfm. An archived version of the webcast will be available at the same website shortly after the conclusion of the live event.

Conference Call Information

FireEye will host a conference call today, February 8, 2018, at 5 p.m. Eastern time (2 p.m. Pacific time) to discuss its fourth quarter and fiscal 2017 financial results and the company's outlook for the first quarter and full year 2018. 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, as well as related multi-media content, can be accessed from the Investor Relations section of the company's website athttp://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 related to future financial results for the first quarter and full year 2018, including revenue, billings, non-GAAP gross margin, non-GAAP operating margin, cash flows generated by operations, interest expense, provision for income taxes, non-GAAP net income (loss) per share, basic and diluted weighted average shares outstanding and capital expenditures in the section entitled "First Quarter and 2018 Outlook" above, as well as statements related to future growth, profitability, innovation, competitive advantages, and adapting as the threat landscape evolves.

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 customer demand and adoption of FireEye's products and services; real or perceived defects, errors or vulnerabilities in FireEye's products or services; any delay in FireEye's release of 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 critical executives and key 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 failure to achieve expected synergies and efficiencies of operations between FireEye and its acquired companies; the ability of FireEye and its acquired companies to successfully integrate their respective market opportunities, technologies, products, personnel and operations; 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 November 2, 2017, 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.comand 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.