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FireEye, the hot Internet security company that went public last year and then quickly set about acquiring other companies, has announced another deal.
The company says it will pay a combined $70 million in cash and stock for nPulse Technologies, a Charlottesville, Va.-based company that makes products used in network forensics, the work of analyzing what happened on a network after it has been attacked by hackers. As its founder Randy Caldejon explained in a write-up by the local newspaper: “If there is a hack, we can figure out how it happened.”
FireEye will pay $60 million in cash and issue $10 million worth of shares for the company. The deal was its second since it paid $1 billion to acquire the security incident response company Mandiant and thus became the new powerhouse of the Internet security business.
According to documents on file with the U.S. Securities and Exchange Commission, nPulse had raised roughly $3 million in investment capital. That’s going to raise some questions with analysts on FireEye’s earnings conference call, which is set to begin shortly.
I asked about the price paid and got the following response from a FireEye spokesman: “FireEye pursues acquisition targets based on the strategic synergies that we can leverage from the acquisition. We don’t acquire based on funding. We are focused on technology, people and the market opportunity. When looking at this combination, nPulse provides a tremendous upside opportunity. We need this technology to continue our mission and we are excited with this opportunity and what it brings to the market.”
FireEye shares fell more than $3 or more than seven percent to close at $37.13 during the regular trading session. They fell an additional nine percent after hours to $33.85, which is more than two dollars below its IPO price of $36 a share from September.
Also, FireEye just reported its Q1 results. It beat estimates handily, losing 53 cents a share on a non-GAAP basis on revenue of $74 million. That’s a smaller loss than the 73 cents analysts had expected, and also beats the revenue consensus by about $2 million and change.