Shares of FireEye Plunge, Layoffs Planned, Forecasts Cut
This came as the company announced sales for the most recent quarter below its forecast because of a slowdown in the demand for services it provides businesses in response to hacking attacks.
Shares of FireEye fell more than 16% in extended Thursday trading. The company, based in Milpitas, California also slashed its sales outlook for the full year.
Michael Berry the company’s CFO said that the company’s job cuts are a part of its effort in restructuring that would lower its annual costs by $80 million.
Kevin Mandia the CEO at FireEye said the business was responding more frequently to cyber criminals that are financially driven and engage in types of crimes like ransomware that are quite simple to clean following the crime.
The scope and size have changed, added Mandia. He continued by saying that the remediation was far more complex at the time the company responded to large numbers of hacks that were state-sponsored from China.
FireEye slashed its revenue forecast for the full year from between $780 million and $810 million to between $716 million and $728 million.
The security firm is still eyeing non-GAAP profitability by the start of 2018 and it expects to generate free-cash flow during 2017, said Berry during a conference call with analysts.
FireEye posted revenue for the second quarter of more than $175 million, which missed its projection released before of between $178 million and $185 million.
Executives put blame for the problems on the slowdown in the services business, including Mandiant its high profile forensics unit, which helps companies, respond to any cyber attack.
The revenue for that division increased only 2% for the just ended quarter in comparison to more than 40% during the prior three months.
Its overall number of engagement increased, but the average revenue from individual ones dropped dramatically due to the work being performed being less extensive.
Mandia said this was because of a shift from previous years of the large amount of espionage hackers who were state sponsored from China attacking clients across the U.S.
Billings for the second quarter at FireEye were $196.3 million, which fell short of its forecasted amount of between $200 million and $215 million.
The billings forecast for the full year was also cut by FireEye from its previous forecast of between $975 million and $1.05 billion to between $834 million and $855 million.