This One Thing Could Crush FireEye’s Stock this Quarter

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FireEye Inc. (FEYE) Information Technology - Software | Reports May 5, After Market Closes

Key Takeaways

• The Estimize consensus is calling for a loss of 48 cents per share on $173.20 million in revenue, 2 cents higher than Wall Street on the bottom line and $1 million on the top
• FireEye continues to turn a loss and revenue growth has begun decelerate, causing share to freefall
• FireEye’s strategic partnerships with Visa and HP should hopefully lift the stock out of the gutter
• What are you expecting for FEYE? Get your estimate in here!

Cybersecurity has seen better days and for FireEye this is no different. FireEye is best known as a leading provider of cyber security and dynamic malware solutions. While the threat of cyber attacks increasing in the past few years, this hasn’t done much to help FireEye’s financial performance. While growth numbers, specifically on the top-line remain impressive, they have been decelerating for the last 6 quarters. Much like its peers, FireEye continually turns a profit loss coupled with strong revenue growth, only to see shares plunge on poor guidance. In the past 12 months the stock has declined over 60% as the company consistently misses its lofty expectations.

This quarter is shaping up to be more of the same. The Estimize consensus is calling for a loss of 48 cents per share on $173.20 million in revenue, 3 cents higher on than Wall Street on the bottom line and $1 million on the top. EPS estimates have come down 19% from where they were at the start of the season and currently reflect a 2% increase from a year earlier. Revenue on the other hand is predicted to grow 38% over the same time frame. 

The biggest problem with FireEye has been its inability to maintain robust growth. Last quarter’s 29% increase in total revenue decelerated from the 150% growth rate the company posted in Q4 2014. Drastic declines like these have put the company and shareholders in a precarious position.

Still you can’t discount some of the gains FireEye made last year, like a 35% increase in total billings and operating cash flow that turned positive. The company has also emerged as a leader in cyber security intelligence with a top notch security as a service (SaaS) platform. Meanwhile, FireEye continues to pursue strategic initiatives and just last year partnered with both Visa and HP to develop tailored security solutions. Unfortunately, all the goods things FireEye is doing will probably be overlooked tomorrow. A large portion of its report will hinge on how the company guides for future quarters.