FireEye, Inc. reports 16.1% CAPEX growth in 2018 and 6.6% Revenue growth
02/06/2019 • About FireEye, Inc. (
$FEYE) • By InTwits
FireEye, Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- FireEye, Inc. is a growth stock: 2018 revenue growth was 6.6%, 5 year revenue CAGR was 38.8% at 2018 ROIC -12.0%
- The company operates at negative EBITDA Margin: -11.5%
- FireEye, Inc. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 is 26.5%. Average EBITDA Margin for the same period was -39.7%
- FireEye, Inc. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.3%. At the same time it's a lot of higher than industry average of 3.1%.
- CAPEX is quite volatile: $13m in FY2018, $62m in FY2017, $62m in FY2016, $76m in FY2015, $39m in FY2014
- In the last 5 years the company invested considerably less than D&A: $253m vs. $515m. In 2018 this situation was still the same: CAPEX was 51 while D&A was 87
- The company has unprofitable business model: ROIC is -12.0%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.6x while industry average is -1.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased on 6.6%. Revenue growth showed slowdown in 18Q4 - it was 5.7% YoY. Revenue followed a declining trend in 2014-2018. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.6 pp from 20.0% to 21.7% in 2018. EBITDA Margin grew at 20.4 pp per annum in the last 5 years.
Gross Margin increased on 2.1 pp from 65.2% to 67.2% in 2018. Gross Margin followed a growing trend at 1.9 pp per annum in the last 5 years. SG&A as a % of Revenue decreased on 6.2 pp from 64.8% to 58.6% in 2018. SG&A as a % of Revenue declined at -16.3 pp per annum in the last 5 years. Stock Based Compensation (SBC) as a % of Revenue decreased on 2.8 pp from 21.3% to 18.5% in 2018. SBC as a % of Revenue stuck to a declining trend at -4.9 pp per annum in 2014-2018.
Net Income margin increased on 7.3 pp from -36.6% to -29.3% in 2018. Net Income margin followed a growing trend at 20.0 pp per annum in 2014-2018.
Investments (CAPEX, working capital and M&A)
In 2018 FireEye, Inc. had CAPEX/Revenue of 6.1%. CAPEX/Revenue decreased on 2.6 pp from 8.8% in 2015 to 6.1% in 2018. It's average level of CAPEX/Revenue for the last three years was 5.6%. During the last 5 years CAPEX as a % of Revenue bottomed in 2016 at 5.1% and was growing since that time.
Accounts receivable as a % of Revenue showed almost no change in 2018. Inventories as a % of Revenue showed almost no change at 0.79% in 2018. Accounts payable as a % of Revenue decreased on 3.2 pp from 13.1% to 9.9% in 2018.
FireEye, Inc. has spent
$5m on M&A in 2018 which accounts for 0.63% of revenue.
Return on investment
The company operates at negative ROIC (-12.0%) and ROE (-37.9%). ROIC increased on 4.0 pp from -16.0% to -12.0% in 2018. ROE increased slightly on 0.80 pp from -38.7% to -37.9% in 2018. ROIC grew at 8.7 pp per annum in the last 5 years. During 2014-2018 ROE bottomed in 2016 at -50.9% and was growing since that time.
Leverage (Debt)
Debt level is 2.6x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA didn't change in 2018. Debt surged on 23.5% while cash surged on 127%.
The company has no short term refinancing risk: short term debt is zero.
Average interest expence paid by the company was 5.9% in 2018.
Management team
Kevin Mandia is a the company's CEO. Kevin Mandia is a founder and has spent 3 years with the company. CEO total compensation was
$6,544,668 in 2018 which included
$418,750 salary. The company's CFO is Frank E Verdecanna. Frank E Verdecanna has 2 years tenure at the company.
The company has 3.2% shares owned by insiders. Insider ownership didn't change in 2018.
At the end of financial year the company had 3,200 employees. The number of employees increased on 8.1%. Average revenue per employee in 2018 was
$259,672 and it decreased slightly on 1.4%.
Financial and operational results
FY ended 12/31/2018
FireEye, Inc. ($FEYE) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 425.7 | 623.0 | 714.1 | 779.6 | 831.0 | 6.6% |
| Gross Profit | 250.6 | 389.8 | 442.2 | 508.0 | 558.5 | 9.9% |
| SG&A | 522.3 | 618.0 | 579.3 | 504.8 | 486.7 | -3.6% |
| EBITDA | -385.1 | -395.7 | -325.0 | -136.7 | -95.9 | |
| EBIT | -479.2 | -507.7 | -444.3 | -240.1 | -182.4 | |
| Interest expence | 0.0 | 27.1 | 47.9 | 49.8 | 56.4 | 13.4% |
| Tax | -36.7 | 4.1 | -8.7 | 4.6 | 5.5 | 19.3% |
| Net Income | -443.8 | -539.2 | -480.1 | -285.2 | -243.1 | |
| Stock Based Compensation | 151.9 | 222.1 | 199.1 | 166.3 | 153.7 | -7.6% |
Balance Sheet
|
|---|
| Cash | 146.4 | 402.1 | 223.7 | 180.9 | 409.8 | 126.6% |
| Accounts Receivable | 193.2 | 172.8 | 121.2 | 146.3 | 157.8 | 7.9% |
| Inventory | 8.0 | 13.7 | 6.0 | 5.7 | 6.5 | 14.0% |
| Accounts Payable | 34.1 | 43.7 | 20.3 | 35.7 | 26.9 | -24.5% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 706.2 | 742.0 | 779.6 | 962.6 | 23.5% |
Cash flow
|
|---|
| Capex | 67.7 | 54.5 | 36.3 | 43.8 | 50.8 | 16.1% |
| Acquisitions | 55.1 | | 204.9 | 4.3 | 5.2 | 21.9% |
Ratios
|
|---|
| Revenue growth | 163.5% | 46.4% | 14.6% | 9.2% | 6.6% | |
| EBITDA growth | 154.2% | 2.8% | -17.9% | -58.0% | -29.8% | |
|
|---|
| Gross Margin | 58.9% | 62.6% | 61.9% | 65.2% | 67.2% | 2.1% |
| EBITDA Margin | -90.5% | -63.5% | -45.5% | -17.5% | -11.5% | 6.0% |
| EBIT Margin | -112.6% | -81.5% | -62.2% | -30.8% | -22.0% | 8.8% |
| SG&A, % of revenue | 122.7% | 99.2% | 81.1% | 64.8% | 58.6% | -6.2% |
| SBC, % of revenue | 35.7% | 35.7% | 27.9% | 21.3% | 18.5% | -2.8% |
| Net Income Margin | -104.3% | -86.6% | -67.2% | -36.6% | -29.3% | 7.3% |
| CAPEX, % of revenue | 15.9% | 8.8% | 5.1% | 5.6% | 6.1% | 0.5% |
|
|---|
| ROIC | -44.5% | -38.4% | -28.7% | -16.0% | -12.0% | 4.0% |
| ROE | -38.6% | -47.0% | -50.9% | -38.7% | -37.9% | 0.8% |
| Interest expence / Average debt | | 7.7% | 6.6% | 6.5% | 5.9% | -0.7% |
People
|
|---|
| Insider ownership | 3.2% | 3.2% | 3.2% | 3.2% | 3.2% | 0.0% |
| Employees | 2,500 | 3,100 | 2,900 | 2,960 | 3,200 | 8.1% |
| Revenue/Employee, th. $ | 170 | 201 | 246 | 263 | 260 | -1.4% |
FireEye, Inc. ($FEYE) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 199 | 203 | 212 | 218 | | 7.7% | 5.7% | 7.2% | 5.7% |
| EBITDA | -38 | -26 | -14 | -17 | | | | | |
| Net Income | -72 | -73 | -50 | -48 | | | | | |
Balance Sheet
|
|---|
| Cash | 168 | 351 | 397 | 410 | | 2.7% | 127.5% | 147.1% | 126.6% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 789 | 939 | 951 | 963 | | 5.1% | 23.5% | 23.5% | 23.5% |
Ratios
|
|---|
| Gross Margin | 65.9% | 66.8% | 68.1% | 67.9% | | 1.5% | 2.2% | 3.1% | 1.4% |
| EBITDA Margin | -19.3% | -13.0% | -6.8% | -7.8% | | 2.2% | 3.0% | 9.5% | 8.9% |
| Net Income Margin | -36.1% | -35.9% | -23.6% | -22.2% | | 5.7% | -0.3% | 11.4% | 12.0% |
Peers in Systems Software
Below we provide FireEye, Inc. benchmarking against other companies in Systems Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Advantego Corp ($ADGO) | | | | | 973.8% |
| Solbright Group Inc ($SBRT) | | | 286.4% | 25.4% | 414.0% |
| Duos Technologies Group Inc ($DUOT) | | 61.0% | -9.8% | -36.4% | 210.2% |
| Dell Technologies Inc. ($DVMT) | | | | | 145.7% |
| Finjan Holdings, Inc. ($FNJN) | | -6.2% | 292.3% | 174.6% | 63.0% |
| |
|---|
| Median (48 companies) | | 18.2% | 14.7% | 16.6% | 20.4% |
|---|
| FireEye, Inc. ($FEYE) | | 46.4% | 14.6% | 9.2% | 6.6% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| StrikeForce Technologies Inc ($SFOR) | 97.0% | 96.9% | 98.3% | 95.4% | 94.0% |
| Varonis Systems, Inc. ($VRNS) | 90.2% | 90.6% | 90.5% | 90.4% | 89.8% |
| Check Point Software Technologies Ltd. ($CHKP) | 88.2% | 88.5% | 88.5% | 88.6% | 89.6% |
| Tableau Software, Inc. ($DATA) | 91.0% | 88.7% | 88.0% | 87.1% | 87.7% |
| Attunity Ltd. ($ATTU) | 90.7% | 84.9% | 83.9% | 84.1% | 87.5% |
| |
|---|
| Median (53 companies) | 77.0% | 75.4% | 73.6% | 74.1% | 75.0% |
|---|
| FireEye, Inc. ($FEYE) | 58.9% | 62.6% | 61.9% | 65.2% | 67.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Check Point Software Technologies Ltd. ($CHKP) | 54.3% | 52.4% | 49.8% | 50.7% | 48.8% |
| SolarWinds Corporation ($SWI) | | | -8.0% | 44.0% | 44.8% |
| Finjan Holdings, Inc. ($FNJN) | -192.1% | -295.2% | 2.2% | 30.2% | 42.0% |
| Oracle Corporation ($ORCL) | 46.2% | 43.8% | 40.8% | 40.2% | 40.8% |
| CA Inc. ($CA) | 33.9% | 36.7% | 37.2% | 36.1% | 35.3% |
| |
|---|
| Median (47 companies) | 1.0% | -5.0% | -8.0% | -3.6% | -3.9% |
|---|
| FireEye, Inc. ($FEYE) | -90.5% | -63.5% | -45.5% | -17.5% | -11.5% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| The Rubicon Project, Inc. ($RUBI) | 15.6% | 11.4% | 12.0% | 26.0% | 16.0% |
| CYREN Ltd. ($CYRN) | 2.4% | 4.4% | 3.2% | 5.8% | 9.2% |
| ServiceNow, Inc. ($NOW) | 8.0% | 8.7% | 7.6% | 7.8% | 8.6% |
| Qualys, Inc. ($QLYS) | 10.4% | 12.2% | 11.7% | 16.4% | 8.2% |
| Zscaler, Inc. ($ZS) | | 12.5% | 7.8% | 6.5% | 8.0% |
| |
|---|
| Median (48 companies) | 2.7% | 2.1% | 2.0% | 2.2% | 2.5% |
|---|
| FireEye, Inc. ($FEYE) | 15.9% | 8.8% | 5.1% | 5.6% | 6.1% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Finjan Holdings, Inc. ($FNJN) | -42.6% | -113.5% | 3.4% | 46.6% | 64.1% |
| Fortinet, Inc. ($FTNT) | 9.2% | 2.1% | 5.3% | 15.0% | 28.0% |
| Check Point Software Technologies Ltd. ($CHKP) | 22.2% | 23.7% | 24.7% | 26.8% | 25.5% |
| MAM Software Group, Inc. ($MAMS) | 13.3% | 19.3% | 21.1% | 24.2% | 25.2% |
| Red Hat, Inc. ($RHT) | 15.1% | 14.1% | 14.2% | 16.4% | 22.4% |
| |
|---|
| Median (56 companies) | 0.0% | 0.0% | 0.0% | -2.7% | -0.9% |
|---|
| FireEye, Inc. ($FEYE) | -44.5% | -38.4% | -28.7% | -16.0% | -12.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| NXT-ID Inc. ($NXTD) | | | | | 9.7x |
| Symantec Corporation ($SYMC) | -3.2x | -1.5x | -5.0x | 10.0x | 4.7x |
| SolarWinds Corporation ($SWI) | | | | 6.2x | 4.1x |
| Oracle Corporation ($ORCL) | 0.4x | 1.2x | 1.6x | 2.4x | 2.4x |
| ServiceNow, Inc. ($NOW) | | | | 9.0x | 0.9x |
| |
|---|
| Median (23 companies) | -2.4x | -1.4x | -1.2x | -0.6x | -0.4x |
|---|
