Business Wire | Feb 2, 2021 04:01PM EST

FireEye Reports Financial Results for Fourth Quarter and Full Year 2020

Feb. 02, 2021

MILPITAS, Calif.--(BUSINESS WIRE)--Feb. 02, 2021--FireEye, Inc. (NASDAQ: FEYE), the intelligence-led security company, today announced financial results for the fourth quarter and full year ended December 31, 2020.

"Our record fourth quarter and 2020 results demonstrated that we are gaining momentum in our Platform, Cloud Subscription, Managed Services and Professional services categories. The combined revenue from these two categories accounted for 55% of total revenue in 2020 and increased 23% from the full year 2019," said Kevin Mandia, FireEye chief executive officer.

"We continue to transform our business and believe we are well-positioned as organizations shift to intelligence-led security focused on security effectiveness. Our vision is to become a seamless extension of our customers' security operations by delivering our threat intelligence and expertise gained on the frontlines through the Mandiant Advantage platform," added Mandia.

Fourth Quarter 2020 Financial Results

Q4 2020 Q4 2019 Y/Y change

Revenue $248 $235 +5% million million

Annualized recurring revenue^2 $638 $592 +8% million million

GAAP gross margin 65% 66% -1 pt

Non-GAAP gross margin^1 72% 73% -1 pt

GAAP operating margin (11)% (15)% +4 pts

Non-GAAP operating margin^1 12% 7% +5 pts

GAAP net income (loss) per share attributable to $(0.17) $(0.23) +$0.06common stockholders, basic and diluted

Non-GAAP net income (loss) per share attributable $0.12 $0.07 +$0.05to common stockholders, diluted^1

Cash flow provided (used) by operating activities $71 $40 +$31 million million million

Capital expenditures $4 $7 $(3) million million million

2020 Financial Results

2020 2019 Y/Y change

Revenue $941 $889 +6% million million

GAAP gross margin 64% 65% -1 pt

Non-GAAP gross margin^1 71% 73% -2 pts

GAAP operating margin (16)% (24)% +8 pts

Non-GAAP operating margin^1 8% 1% +7 pts

GAAP net income (loss) per share attributable to $(0.93) $(1.24) +$0.31common stockholders, basic and diluted

Non-GAAP net income (loss) per share attributable $0.31 $0.05 +$0.26to common stockholders, diluted^1

Cash flow provided (used) by operating activities $95 $68 +$27 million million million

Capital expenditures $26 $46 $(20) million million million

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."

2 Annualized recurring revenue is defined as the annualized run-rate of active term licenses, subscriptions, and support contracts at the end of a reporting period.

First Quarter and 2021 Outlook

FireEye provides guidance based on current market conditions and expectations. The company emphasizes that the guidance is subject to various important cautionary factors referenced in the section entitled "Forward-Looking Statements" below, including risks and uncertainties associated with the COVID-19 pandemic.

Q1 2021 2021 Outlook Outlook

Revenue $235 - $238 $990 - $1,010 million million

Non-GAAP gross margin 70% - 71% 70.5% - 71.5%

Non-GAAP operating margin 6.5% - 7.5% 9% - 10%

Net interest income (expense) $(1) million $(3) - $(4) million

Provision for non-GAAP income taxes $1 - $2 $4 - $6 million million

Weighted average shares outstanding, diluted 238 million 240 - 245 million

Non-GAAP net income (loss) per share attributable $0.05 - $0.35 - $0.37to common stockholders, diluted $0.07

Capital expenditures ~ $6 million ~ $25 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, acquisition related expenses, restructuring charges, non-cash interest expense related to the company's convertible senior notes, discrete tax provision (benefit), dividends on Series A convertible preferred stock, other special non-recurring items, and shares issuable upon conversion of the company's convertible senior notes and Series A convertible preferred shares that are anti-dilutive. A reconciliation of non-GAAP guidance measures to the most directly comparable GAAP financial 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 expense in the first quarter of 2021 and full year 2021 will have a significant impact on the company's GAAP operating margin and net loss per share attributable to common stockholders. 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 most directly comparable GAAP financial measures for future periods is not available without unreasonable effort.

Recent Highlights

* Uncovered an international cyber espionage campaign with our discovery of a supply chain compromise in the SolarWinds Orion platform * Strengthened our management team with the addition of Bryan Palma as Executive Vice President, FireEye Products * Added new board members, Viral Patel, Senior Managing Director at Blackstone and Arthur Coviello, Venture Partner at Rally Ventures * Introduced Mandiant Advantage, a software-as-a-service (SaaS) platform for delivery of our solutions, beginning with Mandiant Intelligence; Mandiant Validation and other offerings will become available on the platform in coming months * Announced a $400 million strategic investment by Blackstone and ClearSky to accelerate investment in Mandiant Solutions strategic growth initiatives * Acquired Respond Software, an innovator in security operations automation through AI-driven eXtended Detection and Response (XDR) * Awarded first place by Naval Information Warfare Systems Command in a network threat detection challenge, following the March 2020 first place award for FireEye Endpoint Security * Recognized by CRN with a 2020 CRN Tech Innovator award in the 'Security - Risk Assessment and Management' category for Mandiant Security Validation

Conference Call Information

FireEye will host a conference call today, February 2, 2021, at 5 p.m. Eastern time (2 p.m. Pacific time) to discuss its fourth quarter financial results and the company's outlook for the first quarter and full year 2021. 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 https://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 2021, including revenue, non-GAAP gross margin, non-GAAP operating margin, net interest income and expense, provision for non-GAAP income taxes, weighted average shares outstanding, non-GAAP net income per share, and capital expenditures in the section entitled "First Quarter and 2021 Outlook" above, as well as statements regarding plans and opportunities, including new offerings.

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, solutions and services; real or perceived defects, errors or vulnerabilities in FireEye's products, solutions or services; any delay in the release of FireEye's new products, solutions or services; FireEye's ability to realize the expected benefits resulting from its 2020 restructuring plans; the potential disruption or perception of disruption to FireEye's business due to the restructuring plans; the impact of the COVID-19 pandemic on FireEye's business, results of operations, liquidity and capital resources; 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, solutions 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 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 October 30, 2020, 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.

Non-GAAP Financial Measures

In this release FireEye has provided financial information that has not been prepared in accordance with generally accepted accounting principles in the United States (GAAP). These non-GAAP financial measures are not based on any standardized methodology and are not necessarily comparable to similar measures used by other companies. The company uses these non-GAAP financial measures internally in analyzing its financial results and believes the use of these non-GAAP financial measures is useful to investors as an additional tool to evaluate ongoing operating results and trends, and in comparing the company's financial results with other companies in its industry, many of which present similar non-GAAP financial measures.

Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable financial information prepared in accordance with GAAP and should be read only in conjunction with the company's consolidated financial statements prepared in accordance with GAAP. A reconciliation of the company's non-GAAP financial measures to their most directly comparable GAAP financial measures has been provided in the financial statement tables included in this press release, and investors are encouraged to review the reconciliation.

Non-GAAP gross margin. FireEye defines non-GAAP gross margin as total gross profit excluding stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, and, as applicable, other special or non-recurring items, divided by total revenue.

Non-GAAP operating income (loss) and non-GAAP operating margin. FireEye defines non-GAAP operating income (loss) as operating income (loss) excluding stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition-related expenses, restructuring charges, and other special or non-recurring items. FireEye defines non-GAAP operating margin as non-GAAP operating income (loss) divided by total revenue.

Non-GAAP net income (loss) attributable to common stockholders. FireEye defines non-GAAP net income (loss) attributable to common stockholders as net income (loss) excluding stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition-related expenses, restructuring charges, non-cash interest expense related to the company's convertible senior notes, discrete tax provision (benefit), dividends on Series A convertible preferred stock, and other special or non-recurring items.

Non-GAAP net income (loss) per share attributable to common stockholders. FireEye defines non-GAAP net income per diluted share attributable to common stockholders as non-GAAP net income attributable to common stockholders divided by weighted average diluted shares outstanding. Weighted average diluted shares used to calculate non-GAAP net income per diluted share attributable to common stockholders excludes shares issuable upon conversion of the company's convertible senior notes and Series A convertible preferred shares that are anti-dilutive. FireEye defines non-GAAP net loss per share attributable to common stockholders as non-GAAP net loss attributable to common stockholders divided by weighted average basic shares outstanding, which excludes stock options, restricted stock units, performance stock units, and shares issuable upon conversion of the company's convertible senior notes and Series A convertible preferred shares that are anti-dilutive.

Non-GAAP net income attributable to common stockholders and non-GAAP net income per diluted share attributable to common stockholders in the fourth quarter and full year of 2020 excluded stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition related expenses, restructuring charges, non-cash interest expense related to convertible senior notes issued in June 2015 and the second quarter of 2018, discrete tax provision (benefit), and dividends on Series A convertible preferred stock. Weighted average diluted shares outstanding used to calculate non-GAAP net income per diluted share excluded stock options, restricted stock units, performance stock units, and shares issuable upon conversion of the company's convertible senior notes and Series A convertible preferred shares that were anti-dilutive.

Non-GAAP net income attributable to common stockholders and non-GAAP net income per diluted share attributable to common stockholders in the fourth quarter and full year of 2019 excluded stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition related expenses, restructuring charges, non-cash interest expense related to convertible senior notes issued in June 2015 and the second quarter of 2018, and discrete tax provision (benefit). Weighted average diluted shares outstanding used to calculate non-GAAP net income per diluted share excluded stock options, restricted stock units, performance stock units, and shares issuable upon conversion of the company's convertible senior notes that were anti-dilutive.

FireEye considers these non-GAAP financial measures to be useful metrics for management and investors because they exclude the effect of stock-based compensation expense, amortization of stock-based compensation expense capitalized in software development costs, amortization of intangible assets, acquisition related expenses, restructuring charges, non-cash interest expense related to convertible senior notes issued in June 2015 and the second quarter of 2018, discrete tax provision (benefit), dividends on Series A convertible preferred stock, and other non-recurring and discrete items so that management and investors can compare the company's core business operating results over multiple periods.

There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. First, these non-GAAP financial measures exclude stock-based compensation expense. Stock-based compensation is an important part of FireEye employees' overall compensation and has been, and will continue to be for the foreseeable future, a significant recurring expense in the company's business. Second, the components of the costs that FireEye excludes in its calculation of these non-GAAP financial measures, including not only stock-based compensation, but also amortization of stock-based compensation expense capitalized in software development costs, non-recurring or non-operating items such as amortization of intangible assets, acquisition related expenses, restructuring charges, non-cash interest expense related to the company's convertible senior notes, discrete tax provision (benefit), and dividends on Series A convertible preferred stock, may differ from the components excluded by peer companies when they report their non-GAAP results of operations. FireEye compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP financial measures and evaluating non-GAAP financial measures together with their nearest GAAP equivalents.

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(r) 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 9,900 customers across 103 countries, including more than 50 percent of the Forbes Global 2000.

(c) 2021 FireEye, Inc. All rights reserved. FireEye and Mandiant 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.

FireEye, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands)

December 31, December 31, 2020 2019

Assets

Current assets:

Cash and cash equivalents $ 676,454 $ 334,603

Short-term investments 624,824 704,955

Accounts receivable, net 153,575 171,459

Inventories 4,023 5,892

Prepaid expenses and other current assets 103,368 96,827

Total current assets 1,562,244 1,313,736

Property and equipment, net 79,770 93,812

Operating lease right-of-use assets, net 38,251 58,758

Goodwill 1,364,886 1,205,292

Intangible assets, net 126,067 134,420

Deposits and other long-term assets 74,664 84,468

Total Assets $ 3,245,882 $ 2,890,486



Liabilities, Convertible preferred stock and Stockholders' equity

Current Liabilities:

Accounts payable $ 5,107 $ 26,271

Operating lease liabilities, current 16,024 18,437

Accrued and other current liabilities 23,239 24,496

Accrued compensation 95,664 59,513

Convertible senior notes, current, net - 117,288

Deferred revenue, current 613,709 603,944

Total current liabilities 753,743 849,949

Convertible senior notes, non-current, net 960,896 893,273

Deferred revenue, non-current 342,748 370,623

Operating lease liabilities, non-current 42,202 70,481

Other long-term liabilities 12,339 4,494

Total liabilities 2,111,928 2,188,820

Commitments and contingencies

Series A convertible preferred stock $ 401,050 $ -

Stockholders' equity:

Common stock 24 22

Additional paid-in capital 3,623,243 3,457,359

Treasury stock (80,000 ) (150,000 )

Accumulated other comprehensive income 3,834 1,180

Accumulated deficit (2,814,197 ) (2,606,895 )

Total stockholders' equity 732,904 701,666

Total Liabilities, Convertible preferred stock and $ 3,245,882 $ 2,890,486 Stockholders' equity

FireEye, Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in thousands, except per share amounts)

Three Months Ended December 31,

Year Ended December 31,

2020

2019

2020

2019

Revenue:

Product, subscription and support

$

189,721

$

185,008

$

724,945

$

708,836

Professional services

57,781

50,078

215,639

180,316

Total revenue

247,502

235,086

940,584

889,152

Cost of revenue: (1)(2)(3)

Product, subscription and support

55,160

54,494

217,255

210,432

Professional services

31,883

26,217

116,772

98,460

Total cost of revenue

87,043

80,711

334,027

308,892

Total gross profit

160,459

154,375

606,557

580,260

Operating expenses:

Research and development (1)(2)(3)

63,009

67,537

252,771

271,326

Sales and marketing (1)(2)

96,796

93,077

380,998

396,822

General and administrative (1)

25,646

28,862

101,452

111,881

Restructuring charges (5)

1,487

(15

)

26,507

10,265

Total operating expenses

186,938

189,461

761,728

790,294

Operating loss

(26,479

)

(35,086

)

(155,171

)

(210,034

)

Other expense, net (6)

(12,182

)

(11,702

)

(49,238

)

(41,685

)

Loss before income taxes

(38,661

)

(46,788

)

(204,409

)

(251,719

)

Provision (benefit) for income taxes (7)

(58

)

2,428

2,894

5,690

Net loss

$

(38,603

)

$

(49,216

)

$

(207,303

)

$

(257,409

)

Dividend on series A convertible preferred stock (8)

(1,050

)

-

(1,050

)

-

Net loss attributable to common stockholders, basic and diluted

$

(39,653

)

$

(49,216

)

$

(208,353

)

$

(257,409

)

Net loss per share attributable to common stockholders, basic and diluted

$

(0.17

)

$

(0.23

)

$

(0.93

)

$

(1.24

)

Weighted average shares used in per share calculations, basic and diluted

229,203

214,565

223,308

207,234

FireEye, Inc.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited, in thousands, except per share amounts)

Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019

Revenue:

Product, subscription $ 189,721 $ 185,008 $ 724,945 $ 708,836 and support

Professional services 57,781 50,078 215,639 180,316

Total revenue 247,502 235,086 940,584 889,152

Cost of revenue: (1)(2) (3)

Product, subscription 55,160 54,494 217,255 210,432 and support

Professional services 31,883 26,217 116,772 98,460

Total cost of revenue 87,043 80,711 334,027 308,892

Total gross profit 160,459 154,375 606,557 580,260

Operating expenses:

Research and 63,009 67,537 252,771 271,326 development (1)(2)(3)

Sales and marketing (1) 96,796 93,077 380,998 396,822 (2)

General and 25,646 28,862 101,452 111,881 administrative (1)

Restructuring charges 1,487 (15 ) 26,507 10,265 (5)

Total operating 186,938 189,461 761,728 790,294 expenses

Operating loss (26,479 ) (35,086 ) (155,171 ) (210,034 )

Other expense, net (6) (12,182 ) (11,702 ) (49,238 ) (41,685 )

Loss before income (38,661 ) (46,788 ) (204,409 ) (251,719 )taxes

Provision (benefit) for (58 ) 2,428 2,894 5,690 income taxes (7)

Net loss $ (38,603 ) $ (49,216 ) $ (207,303 ) $ (257,409 )

Dividend on series Aconvertible preferred (1,050 ) - (1,050 ) - stock (8)

Net loss attributableto common stockholders, $ (39,653 ) $ (49,216 ) $ (208,353 ) $ (257,409 )basic and diluted

Net loss per shareattributable to common $ (0.17 ) $ (0.23 ) $ (0.93 ) $ (1.24 )stockholders, basic anddiluted

Weighted average sharesused in per share 229,203 214,565 223,308 207,234 calculations, basic anddiluted

FireEye, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

Year Ended December 31,

2020

2019

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$

(207,303

)

$

(257,409

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization

96,384

103,305

Stock-based compensation

156,107

153,517

Non-cash interest expense related to convertible senior notes

46,728

47,983

Deferred income taxes

(838

)

(257

)

Other

6,998

945

Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in business acquisitions:

Accounts receivable

16,681

(12,109

)

Inventories

3,285

51

Prepaid expenses and other assets

3,607

7,003

Accounts payable

(18,931

)

4,707

Accrued liabilities

(6,738

)

(3,074

)

Accrued compensation

36,151

(4,295

)

Deferred revenue

(20,773

)

36,987

Other long-term liabilities

(16,463

)

(9,817

)

Net cash provided by operating activities

94,895

67,537

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment and demonstration units

(26,326

)

(45,605

)

Purchases of short-term investments

(393,442

)

(617,194

)

Proceeds from maturities of short-term investments

443,396

620,580

Proceeds from sales of short-term investments

29,161

-

Business acquisitions, net of cash acquired

(123,740

)

(127,249

)

Purchase of investment in privately held company

(1,000

)

-

Lease deposits

(207

)

432

Net cash used in investing activities

(72,158

)

(169,036

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Repurchase of convertible senior notes

(96,392

)

-

Series A convertible preferred stock issuance costs

(4,653

)

-

Series A convertible preferred stock

400,000

-

Payment related to shares withheld for taxes

(9,363

)

-

Proceeds from employee stock purchase plan

22,188

22,086

Proceeds from exercise of equity awards

7,334

4,187

Net cash provided by financing activities

319,114

26,273

Net change in cash and cash equivalents

341,851

(75,226

)

Cash and cash equivalents, beginning of period

334,603

409,829

Cash and cash equivalents, end of period

$

676,454

$

334,603

FireEye, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

Year Ended December 31,

2020 2019

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ (207,303 ) $ (257,409 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization 96,384 103,305

Stock-based compensation 156,107 153,517

Non-cash interest expense related to convertible 46,728 47,983 senior notes

Deferred income taxes (838 ) (257 )

Other 6,998 945

Changes in operating assets and liabilities, net ofassets acquired and liabilities assumed in business acquisitions:

Accounts receivable 16,681 (12,109 )

Inventories 3,285 51

Prepaid expenses and other assets 3,607 7,003

Accounts payable (18,931 ) 4,707

Accrued liabilities (6,738 ) (3,074 )

Accrued compensation 36,151 (4,295 )

Deferred revenue (20,773 ) 36,987

Other long-term liabilities (16,463 ) (9,817 )

Net cash provided by operating activities 94,895 67,537

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment and (26,326 ) (45,605 )demonstration units

Purchases of short-term investments (393,442 ) (617,194 )

Proceeds from maturities of short-term investments 443,396 620,580

Proceeds from sales of short-term investments 29,161 -

Business acquisitions, net of cash acquired (123,740 ) (127,249 )

Purchase of investment in privately held company (1,000 ) -

Lease deposits (207 ) 432

Net cash used in investing activities (72,158 ) (169,036 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Repurchase of convertible senior notes (96,392 ) -

Series A convertible preferred stock issuance costs (4,653 ) -

Series A convertible preferred stock 400,000 -

Payment related to shares withheld for taxes (9,363 ) -

Proceeds from employee stock purchase plan 22,188 22,086

Proceeds from exercise of equity awards 7,334 4,187

Net cash provided by financing activities 319,114 26,273

Net change in cash and cash equivalents 341,851 (75,226 )

Cash and cash equivalents, beginning of period 334,603 409,829

Cash and cash equivalents, end of period $ 676,454 $ 334,603

FireEye, Inc.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Unaudited, in thousands, except per share amounts)

Three Months Ended December 31,

Year Ended December 31,

2020

2019

2020

2019

GAAP operating loss

$

(26,479

)

$

(35,086

)

$

(155,172

)

$

(210,034

)

Stock-based compensation expense (1)

42,514

36,355

156,107

153,517

Amortization of stock-based compensation capitalized in software development costs (3)

1,065

968

4,128

3,524

Amortization of intangible assets (2)

11,669

14,531

45,882

53,943

Acquisition related expenses (4)

425

-

425

597

Restructuring charges (5)

1,487

(15

)

26,507

10,265

Non-GAAP operating income (loss)

$

30,681

$

16,753

$

77,877

$

11,812

GAAP gross margin

65

%

66

%

64

%

65

%

Stock-based compensation expense (1)

4

%

3

%

4

%

4

%

Amortization of intangible assets (2)

3

%

4

%

3

%

4

%

Non-GAAP gross margin

72

%

73

%

71

%

73

%

GAAP operating margin

(11

)%

(15

)%

(16

)%

(24

)%

Stock-based compensation expense (1)

17

%

16

%

16

%

17

%

Amortization of stock-based compensation capitalized in software development costs (3)

-

%

-

%

-

%

-

%

Amortization of intangible assets (2)

5

%

6

%

5

%

6

%

Restructuring charges (5)

1

%

-

%

3

%

2

%

Non-GAAP operating margin

12

%

7

%

8

%

1

%

GAAP net loss attributable to common stockholders

$

(39,653

)

$

(49,216

)

$

(208,354

)

$

(257,409

)

Stock-based compensation expense (1)

42,514

36,355

156,107

153,517

Amortization of stock-based compensation capitalized in software development costs (3)

1,065

968

4,128

3,524

Amortization of intangible assets (2)

11,669

14,531

45,882

53,943

Acquisition related expenses (4)

425

-

425

597

Restructuring charges (5)

1,487

(15

)

26,507

10,265

Non-cash interest expense related to convertible senior notes (6)

11,248

12,215

46,728

47,983

Adjustment to provision (benefit) from income taxes (7)

(1,545

)

43

(1,861

)

(861

)

Dividend on series A convertible preferred stock (8)

1,050

-

1,050

-

Non-GAAP net income attributable to common stock holders

$

28,260

$

14,881

$

70,612

$

11,559

GAAP net loss per common share attributable to common stockholders, basic and diluted

$

(0.17

)

$

(0.23

)

$

(0.93

)

$

(1.24

)

Stock-based compensation expense (1)

0.19

0.17

0.70

0.74

Amortization of stock-based compensation capitalized in software development costs (3)

-

-

0.02

0.02

Amortization of intangible assets (2)

0.05

0.07

0.21

0.26

Acquisition related expenses (4)

-

-

-

-

Restructuring charges (5)

0.01

-

0.12

0.05

Non-cash interest expense related to convertible senior notes (6)

0.05

0.06

0.21

0.23

Adjustment to provision (benefit) from income taxes (7)

(0.01

)

-

(0.01

)

-

Dividend on series A convertible preferred stock (8)

-

-

-

-

Non-GAAP net income (loss) per common share attributable to common stockholders, basic

$

0.12

$

0.07

$

0.32

$

0.06

Non-GAAP net income (loss) per common share attributable to common stockholders, diluted

$

0.12

$

0.07

$

0.31

$

0.05

Weighted average shares used in per share calculation for Non-GAAP, basic

229,203

214,565

223,308

207,234

Weighted average shares used in per share calculation for Non-GAAP, diluted

233,287

220,421

226,549

213,043

(1) Includes stock-based compensation expense as follows:

Cost of product, subscription and support revenue

$

4,356

$

3,404

$

16,393

$

14,905

Cost of professional services revenue

5,329

3,333

18,695

13,972

Research and development expense

12,631

10,445

45,867

45,476

Sales and marketing expense

13,460

11,179

49,662

49,198

General and administrative expense

6,738

7,994

25,176

29,966

Restructuring charges

-

-

314

-

Total stock-based compensation expense

$

42,514

$

36,355

$

156,107

$

153,517

(2) Includes amortization of intangible assets as follows:

Cost of product, subscription and support revenue

$

7,228

$

10,332

$

28,739

$

37,643

Research and development expense

22

109

349

445

Sales and marketing expense

4,419

4,090

16,794

15,855

Total amortization of intangible assets

$

11,669

$

14,531

$

45,882

$

53,943

(3) Includes amortization of stock-based compensation capitalized in software development costs as follows:

Cost of product, subscription and support revenue

$

48

$

190

$

200

$

782

Cost of professional services revenue

24

95

100

391

Research and development expense

993

683

3,828

2,350

Total amortization of stock-based compensation capitalized in software development costs

$

1,065

$

968

$

4,128

$

3,523

(4) Includes acquisition related expenses as follows:

General and administrative expense

$

425

$

-

$

425

$

597

(5) Includes restructuring charges as follows:

Restructuring charges

$

1,487

$

(15

)

$

26,507

$

10,265

(6) Includes non-cash interest expense related to convertible senior notes as follows:

Other income, net

$

11,248

$

12,215

$

46,728

$

47,983

(7) Includes income tax effect of non-GAAP adjustments as follows:

Provision (benefit) from income taxes

$

(1,545

)

$

43

$

(1,861

)

$

(861

)

(8) Dividend on series A convertible preferred stock

$

1,050

$

-

$

1,050

$

-

FireEye, Inc.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Unaudited, in thousands, except per share amounts)

Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019

GAAP operating loss $ (26,479 ) $ (35,086 ) $ (155,172 ) $ (210,034 )

Stock-basedcompensation expense 42,514 36,355 156,107 153,517 (1)

Amortization ofstock-basedcompensation 1,065 968 4,128 3,524 capitalized in softwaredevelopment costs (3)

Amortization of 11,669 14,531 45,882 53,943 intangible assets (2)

Acquisition related 425 - 425 597 expenses (4)

Restructuring charges 1,487 (15 ) 26,507 10,265 (5)

Non-GAAP operating $ 30,681 $ 16,753 $ 77,877 $ 11,812 income (loss)

GAAP gross margin 65 % 66 % 64 % 65 %

Stock-basedcompensation expense 4 % 3 % 4 % 4 %(1)

Amortization of 3 % 4 % 3 % 4 %intangible assets (2)

Non-GAAP gross margin 72 % 73 % 71 % 73 %

GAAP operating margin (11 ) (15 ) (16 ) (24 ) % % % %

Stock-basedcompensation expense 17 % 16 % 16 % 17 %(1)

Amortization ofstock-basedcompensation - % - % - % - %capitalized in softwaredevelopment costs (3)

Amortization of 5 % 6 % 5 % 6 %intangible assets (2)

Restructuring charges 1 % - % 3 % 2 %(5)

Non-GAAP operating 12 % 7 % 8 % 1 %margin

GAAP net lossattributable to common $ (39,653 ) $ (49,216 ) $ (208,354 ) $ (257,409 )stockholders

Stock-basedcompensation expense 42,514 36,355 156,107 153,517 (1)

Amortization ofstock-basedcompensation 1,065 968 4,128 3,524 capitalized in softwaredevelopment costs (3)

Amortization of 11,669 14,531 45,882 53,943 intangible assets (2)

Acquisition related 425 - 425 597 expenses (4)

Restructuring charges 1,487 (15 ) 26,507 10,265 (5)

Non-cash interestexpense related to 11,248 12,215 46,728 47,983 convertible seniornotes (6)

Adjustment to provision(benefit) from income (1,545 ) 43 (1,861 ) (861 )taxes (7)

Dividend on series Aconvertible preferred 1,050 - 1,050 - stock (8)

Non-GAAP net incomeattributable to common $ 28,260 $ 14,881 $ 70,612 $ 11,559 stock holders

GAAP net loss percommon shareattributable to common $ (0.17 ) $ (0.23 ) $ (0.93 ) $ (1.24 )stockholders, basic anddiluted

Stock-basedcompensation expense 0.19 0.17 0.70 0.74 (1)

Amortization ofstock-basedcompensation - - 0.02 0.02 capitalized in softwaredevelopment costs (3)

Amortization of 0.05 0.07 0.21 0.26 intangible assets (2)

Acquisition related - - - - expenses (4)

Restructuring charges 0.01 - 0.12 0.05 (5)

Non-cash interestexpense related to 0.05 0.06 0.21 0.23 convertible seniornotes (6)

Adjustment to provision(benefit) from income (0.01 ) - (0.01 ) - taxes (7)

Dividend on series Aconvertible preferred - - - - stock (8)

Non-GAAP net income(loss) per common share $ 0.12 $ 0.07 $ 0.32 $ 0.06 attributable to commonstockholders, basic

Non-GAAP net income(loss) per common share $ 0.12 $ 0.07 $ 0.31 $ 0.05 attributable to commonstockholders, diluted

Weighted average sharesused in per share 229,203 214,565 223,308 207,234 calculation forNon-GAAP, basic

Weighted average sharesused in per share 233,287 220,421 226,549 213,043 calculation forNon-GAAP, diluted



(1) Includesstock-based compensation expense asfollows:

Cost of product,subscription and $ 4,356 $ 3,404 $ 16,393 $ 14,905 support revenue

Cost of professional 5,329 3,333 18,695 13,972 services revenue

Research and 12,631 10,445 45,867 45,476 development expense

Sales and marketing 13,460 11,179 49,662 49,198 expense

General and 6,738 7,994 25,176 29,966 administrative expense

Restructuring charges - - 314 -

Total stock-based $ 42,514 $ 36,355 $ 156,107 $ 153,517 compensation expense



(2) Includesamortization of intangible assets asfollows:

Cost of product,subscription and $ 7,228 $ 10,332 $ 28,739 $ 37,643 support revenue

Research and 22 109 349 445 development expense

Sales and marketing 4,419 4,090 16,794 15,855 expense

Total amortization of $ 11,669 $ 14,531 $ 45,882 $ 53,943 intangible assets



(3) Includesamortization ofstock-basedcompensation capitalized in softwaredevelopment costs asfollows:

Cost of product,subscription and $ 48 $ 190 $ 200 $ 782 support revenue

Cost of professional 24 95 100 391 services revenue

Research and 993 683 3,828 2,350 development expense

Total amortization ofstock-basedcompensation $ 1,065 $ 968 $ 4,128 $ 3,523 capitalized in softwaredevelopment costs



(4) Includesacquisition related expenses as follows:

General and $ 425 $ - $ 425 $ 597 administrative expense



(5) Includesrestructuring charges as follows:

Restructuring charges $ 1,487 $ (15 ) $ 26,507 $ 10,265



(6) Includes non-cashinterest expenserelated to convertible senior notes asfollows:

Other income, net $ 11,248 $ 12,215 $ 46,728 $ 47,983



(7) Includes income taxeffect of non-GAAP adjustments as follows:

Provision (benefit) $ (1,545 ) $ 43 $ (1,861 ) $ (861 )from income taxes



(8) Dividend on seriesA convertible preferred $ 1,050 $ - $ 1,050 $ - stock



FireEye, Inc.

REVENUE BREAKOUT

(Unaudited, in thousands)

Three Months Ended December 31,

Year Ended December 31,

2020

2019

2020

2019

Product and related subscription and support revenue

$

104,589

$

114,050

$

422,812

$

467,823

Platform, cloud subscription and managed services revenue

85,132

70,958

302,133

241,013

Product, subscription and support revenue

189,721

185,008

724,945

708,836

Professional services revenue

57,781

50,078

215,639

180,316

Total revenue

$

247,502

$

235,086

$

940,584

$

889,152

FireEye, Inc.

REVENUE BREAKOUT

(Unaudited, in thousands)

Three Months Ended Year Ended December 31, December 31,

2020 2019 2020 2019

Product and relatedsubscription and support $ 104,589 $ 114,050 $ 422,812 $ 467,823 revenue

Platform, cloudsubscription and managed 85,132 70,958 302,133 241,013 services revenue

Product, subscription and 189,721 185,008 724,945 708,836 support revenue

Professional services 57,781 50,078 215,639 180,316 revenue

Total revenue $ 247,502 $ 235,086 $ 940,584 $ 889,152

ANNUALIZED RECURRING REVENUE BREAKOUT

(Unaudited, in thousands)

As of December 30,

2020

2019

Product and related subscription and support

$

297,530

$

307,718

Platform, cloud subscription and managed services

340,080

284,205

Total annualized recurring revenue

$

637,610

$

591,923

View source version on businesswire.com: https://www.businesswire.com/news/home/20210202006110/en/

CONTACT: Media inquiries: Media.Relations@fireeye.com

CONTACT: Investor inquiries: Investor.Relations@fireeye.com