According to Gartner, the global spending on information security products and services will grow 7% this year to $86.4 billion and to $93 billion by 2018.

FireEye’s Financials

Sun Microsystems’s veteran Ashar Aziz had set up FireEye (Nasdaq: FEYE) in 2004 to cater to a gap he had identified between the evolution path of malware and the development of a blueprint for defenders. He developed FireEye as a virtual machine introspection product that could help customers protect their networks from malware that would have otherwise bypassed traditional signature-based defenses. FireEye’s offerings supplement existing firewalls, IPS, anti-virus, and gateways by blocking attacks across multiple platforms.

FireEye recently reported its third-quarter results that were better than what the market expected. Revenues grew 1.7% over the year to $189.6 million, ahead of the consensus of $186 million and ahead of the company’s earlier guidance of $183-$189 million. The growth in the revenue was attributed to the shift in the business model from product-based to subscription-based. FireEye continued to report losses and ended the quarter with a loss of $0.04 per share compared with the market’s expected loss of $0.07 per share and loss of $0.18 per share a year ago.

By segment, Product revenues fell 30.5% to $30.5 million and subscription and services revenues improved 11.6% to $159.1 million. Billings for the quarter fell 6% to $201.7 million. During the quarter, FireEye added more than 230 new customers and closed 43 transactions with an individual value of over $1 million.

For the current quarter, FireEye forecast revenues of $190-$196 million, with a mid-point of $193 million which was lower than the market’s estimate of $195 million. Billings are projected to be $210-$230 million and it expects to report a loss of $0.03 per share to breakeven. The market was looking for loss of a penny a share. FireEye estimates to end the year with revenues of $739-$745 million compared with the market estimate of $740.8 million. It expects to end the year with a non-GAAP loss of $0.16-$0.19 per share, compared with the Street’s forecast loss of $0.21 per share.