(Adds CEO, analyst comments, details, share movement)
By Laharee Chatterjee
May 2 (Reuters) - FireEye Inc reported a smaller first-quarter loss and said it expects to be profitable for 2018 on Wednesday as the cybersecurity firm gains from its shift to a subscription-based model.
However, the results and guidance failed to impress investors, with analysts expecting a more upbeat forecast for the company. Shares of the company, which have risen more than 30 percent this year, fell 3 percent after the bell.
“The beat and guidance raise wasn’t big enough. Over the last several quarters, the company has been executing more consistently with upside,” Steve Koenig, analyst at Wedbush Securities said.
“FireEye’s challenge going forward is to gain traction with new products for security orchestration and endpoint security.”
The company is pivoting to a subscription-based model from its traditional business that centered around the sale of hardware boxes to boost recurring revenue and shore up margins.
The subscription and services business rose 7.6 percent to $165.5 million in the quarter ended March 31, above analysts’ expectation of $163.2 million.
“Our newer products and cloud offerings will continue to drive significant growth,” Chief Executive Officer Kevin Mandia said told Reuters.
FireEye reported adjusted billings of $175.1 million, beating analysts’ estimate of $170.3 million.
Billings include revenue recognized plus the change in deferred revenue and is an important indicator of the health of the company’s business.
FireEye’s peers including Palo Alto Networks Inc and Symantec Corp have also been shifting to subscription -based model as more enterprises shift to cloud to lower costs.
In December, research firm Gartner Inc said worldwide enterprise security spending is expected to increase 8 percent to $96.3 billion in 2018. (gtnr.it/2l0awvl)
The company forecast profit of $0.00 to $0.04. Analysts were expecting a profit of 2 cents per share, according to Thomson Reuters I/B/E/S.
FireEye’s net loss narrowed to $71.8 million in the three months ended March 31, from $77.2 million, a year earlier.
On an adjusted basis, the company lost 4 cents per share.
Total revenue rose about 8 percent to $199.1 million.
Analysts on an average had expected the company to report a loss of 4 cents per share and revenue of $194.7 million. (Reporting by Laharee Chatterjee in Bengaluru; Editing by Sriraj Kalluvila and Arun Koyyur)