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FireEye Looks To Gain Traction In Midmarket Through Simplified Pricing, Packaging Models

Michael Novinson

FireEye wants to break into the midmarket and grow its footprint in the enterprise through subscription-based pricing and cloud-based product packages.

The Milpitas, Calif.-based company said it has rolled out the FireEye Security Suite with cloud-based versions of its network, email and endpoint security products in hopes of better serving clients with up to 2,000 users. The new suite pricing should make enterprise-grade security more accessible to the midmarket, according to Kevin Mandia, FireEye's CEO.

"We're pretty excited about the impact," Frank Verdecanna, FireEye's executive vice president, CFO and chief accounting officer, told Wall Street analysts Wednesday. "The real impact ultimately is getting us into a market that we haven't been into before in the midmarket."

[Related: FireEye CEO: We've Made It Simpler, More Consistent And More Profitable For Partners To Work With Us]

For larger customers, Mandia said FireEye has simplified the pricing of its network, endpoint and email security products through a single subscription price based on appropriate consumption metrics. Network security will be priced per Mbit per second, email security will be offered on a per-mailbox basis, and endpoint security pricing will be based on the number of devices protected, Mandia said.

"For the first time ever, our customers now have the option to subscribe to any of our products," Mandia said.

Virtual and cloud sensors are included at no additional cost as part of the subscription offering, which Mandia said also provides customers with access to FireEye's integrated Helix platform. Appliance hardware, meanwhile, is available as an add-on on either a subscription basis or as an outright purchase, according to Mandia.

The addition of virtual and cloud appliances has made it easier for large enterprises to expand the scope of their FireEye deployment, Verdecanna said. Specifically, Verdecanna said some customers are now opting for the first time to buy their hardware on a subscription basis, making it possible for clients to cover more of their network than they had in the past.

Even with fewere on-premise appliance sales, Verdecanna said engagement with enterprise customers has typically increased as a result of the subscription offering. Plus. Verdecanna said FireEye is seeing significant traction around net-new customer logos as compared with a year ago.

FireEye sales for the quarter ended March 31 climbed to $199.1 million, up 7.7 percent from $184.8 million the year prior. That crushed Seeking Alpha's estimate of $193.9 million.

The company nodeed a loss of $71.8 million, or 39 cents per diluted share, improved from a loss of $77.2 million, or 45 cents per diluted share, the year prior. On a non-GAAP basis, the loss came in at $7.5 million, or 4 cents per diluted share, better than a loss of $9.3 million, or 5 cents per diluted share, last year. That was in line with Seeking Alpha's projection.

FireEye's stock tumbled $1.15, or 6.20 percent, to $17.40 in after-hours trading. Earnings were released after the market closed Wednesday.

Subscription and services revenue for the quarter jumped to $165.5 million, up 7.6 percent from $153.7 million last year. And product revenue leapfrogged to $33.6 million, up 8.3 percent from $31 million the year before.

For the coming quarter, FireEye expects a node a non-GAAP loss of between zero and 3 cents on sales of between $199 million and $203 million. Seeking Alpha had been projecting a non-GAAP loss of 1 cent per share on sales of $200.4 million.

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