FireEye Inc (FEYE) CEO On The Upcoming Lock-up

FireEye Inc (FEYE) CEO On The Upcoming Lock-up

FireEye Inc (NASDAQ:FEYE) CEO Dave DeWalt has a Q&A session with JPMorgan analyst Sterling Auty about the upcoming lock-up.

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FireEye Inc (NASDAQ:FEYE), Inc. at JPMorgan Global Technology, Media and Telecom Conference

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Event Date/Time: MAY 20, 2014

Sterling Auty – JPMorgan – Analyst

All right. I want to give a chance to have the audience ask questions, but there’s two questions that are on everybody’s minds? So let’s hit them right now, and then we’ll bring the audience into the Q&A session. The first one is, if I look over the last couple of months, every software and Saas company that’s losing money that has gotten absolutely hammered in terms of their stock price, regardless of how fast they’re growing, regardless of the results that they were putting up. So in that context, when you look at that, does that motivate you to perhaps change the strategy to maybe say, we’re going to have to get to profitability or get to cash flow positive situation faster than what you originally thought? So does it change the way you would manage the company?

Dave DeWalt – FireEye Inc (NASDAQ:FEYE) – CEO

Yes, I hadn’t noticed the stock market at all. We’re a pretty young company here, as most of you probably know. Just a year ago, or so, we were almost exponentially smaller than we are today. So in all fairness, we’ve tried to build a global architecture that can really create leverage for our shareholders and for the company. And if you haven’t heard me speak before, we really tried to methodically put in place an architecture that is real and sustainable for long period of time. Having been a public company CEO, this was the first time I had a chance to take a piece of clay, and along with my CFO, design it in a way that allows us to create leverage.


Sterling Auty – JPMorgan – Analyst

You know the big question on everybody’s mind obviously is you have FireEye Inc (NASDAQ:FEYE) lock-up that’s coming off. You made some comments on the March quarter earnings call. I’m not sure what you can say, want to say, but listen, everyone — it’s on people’s minds, so I want to ask it. You’ve got the lock up coming off, what are your thoughts around that?

Dave DeWalt – FireEye Inc (NASDAQ:FEYE) – CEO

Well, first of all, it’s natural, the FireEye Inc (NASDAQ:FEYE) lockup. We’ve also tried to do everything we possibly could to stagger the lock-up, and we did that. We actually had two other components, one being the public offering we did when we raised some primary and secondary in early March. We then had a lock-up expiration for those who did not partake in that public offering on March 18, which was about 13 million shares. It became available during that window. And now we have the general lock-up that came from the public offering we did in March.

So in March we extended that FireEye Inc (NASDAQ:FEYE) lock-up 75 days for all those who partook in that, and now we have about 91 million shares coming off lock-up. But when you break that down, you have a pretty large portion, about 17 million shares, held by executives, directors, and officer level. Most of which don’t have 10b(5)(1)s or vehicles in place to even trade. And by insider trading policies at the company, you have to have that. So the top three or five officers have no plans to sell. We don’t even have a vehicle to sell. So that’s pretty heavily, it stays locked up, because we believe in the company.

Then you have the venture capitalists who are on the board, who also have much higher insider policies for trading. So they can only trade in an open window, not a closed window. And they’re pretty disciplined investors. That’s another 42 million of those shares, just between my top shareholders. Then we actually have a very large block come from the Mandiant venture capitalists, who also are highly disciplined, who have also seen our plans because of the Mandiant merger that we did a few months ago. So they have a lot of insight to the opportunity the company has.

The bottom line — there’ll be some trading of FireEye Inc (NASDAQ:FEYE), clearly. But at the same time, I think it’s a bit overblown how many shares and what’s going on there. But we believe in the future. This is a fantastic opportunity. In my opinion probably the best opportunity in all of technology. Just open the front page of any paper today, as almost every day. And so a big opportunity, it creates a big scenario for the company downstream for its shareholders.

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