FireEye to cut staff amid restructuring effort
- 29 April, 2020 14:48
FireEye is set to embark on a restructuring initiative that will see the cyber security software vendor cut roughly six per cent of its 3000-strong workforce.
On 23 April, FireEye’s board of directors approved a restructuring plan to streamline operations to “more closely align expenses to the company’s projected revenue” while positioning the company for improved operating performance, and allowing it to increase investment in the growth areas of the business.
The vendor's projected revenue for 2020, according to its latest updated annual outlook, is expected to come in at roughly US$880-900 million. The company told shareholders in its latest quarterly financial results report that the restructuring plan includes a reduction of approximately six per cent of its workforce.
FireEye expects the restructuring will reduce its total non-generally accepted accounting principles (GAAP) operating expenses by at least $25 million in 2020, compared to 2019.
The company also said it currently estimates that the move will incur pre-tax charges to its GAAP financial results of between $10-15 million, consisting of severance and other one-time termination benefits, and other restructuring related costs.
The actions associated with the restructuring plan are expected to be completed by the end of the second quarter of 2020, the company said.
Despite the move to downsize its workforce, FireEye’s latest financials reveal a year-on-year increase in revenue for the first quarter to $225 million, although billing for the period was down by seven per cent, to $170 million.
“I believe we performed exceptionally well in the first quarter,” said Kevin Mandia, CEO of FireEye. “We were able to shift our operations around the world almost seamlessly to a work-from-home model on very short notice. This allowed us to remain focused on our mission to protect our customers, as threat actors continue their heated pace of attacks while the world faces a global pandemic."
Mandia also noted that the emerging growth areas of the company’s business -- platform, cloud subscription, and managed services, along with Mandiant Consulting services -- have eclipsed its appliance-based business and accounted for 53 per cent of its revenue in the first quarter. Mandia expects that trend to continue through the rest of this year.
Meanwhile, the ongoing coronavirus pandemic has not hampered the company’s core offering, with cyber threat environment remaining active even as the global economy grinds to a standstill amid lockdown measures. But that doesn't mean the company isn't playing it safe when comes to its financial forecasts.
"The fundamentals of our business remain strong, and with our liquidity and operational flexibility, we believe we are well positioned to manage through this crisis,” added Frank Verdecanna, CFO of FireEye. "However, given the uncertainty regarding the duration and impact of Covid-19, we are withdrawing our billings and operating cash flow guidance for the full year 2020.
“In addition, the guidance that we are providing for Q2 2020 and the full year 2020 comes with the caveat that there is significant uncertainty caused by the Covid-19 pandemic, and that actual results could differ materially from our outlook."