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FireEye Restructures To Drive Growth Around Vendor-Agnostic Services

Having a unified platform group will allow FireEye to better overlay its intelligence, decouple its detection capabilities from its spoke products, and empower security instrumentation, CEO Kevin Mandia said.

FireEye has adopted a new structure that will bring its Mandiant professional services, threat intelligence, managed defense, and Helix and Verodin platforms together into a single organization.

"I believe this new alignment will accelerate our execution toward the platform, and unite the portions of our business that are accelerating in their growth," FireEye CEO Kevin Mandia said Tuesday during the company's earnings call.

The Milpitas, Calif.-based platform security vendor will also consolidate and streamline the product management, engineering, and customer success teams for its network security, endpoint security, email security and SIEM (security information and event management) into a single team led by FireEye's current Chief Technology Officer Grady Summers, Mandia said.

[Related: FireEye CEO: Other Platforms Are Only Providing The 'Veneer' Of Security]

"I kept thinking, 'We're stabilizing core products, but we've got to invent something new and bring that to market,'" Mandia said.

Mandia said having a unified platform group will allow FireEye to better overlay its intelligence, decouple its detection capabilities from its spoke products, and empower security instrumentation through May's $250 million acquisition of cybersecurity startup Verodin.

While FireEye's spoke products compete against other endpoint security, firewall, cloud security, and email security offerings, Mandia said the company's platform group will operate independently of the spokes and not favor FireEye products over anyone else in its analysis. The new structure will allow the group to function more in alignment with how FireEye actually goes to market, according to Mandia.

Mandia said customers are typically turning to FireEye to simplify, integrate and test their security infrastructure, backstop their security capabilities, and provide response and remediation capabilities in times of trouble. FireEye's biggest differentiator is knowing more about threat actors than anyone thanks to its 400 incident responders and 200 threat analysts located in 19 different countries, he said.

"Our true intellectual property should be spoke and vendor-agnostic," Mandia said.

FireEye needs its spoke products such as its endpoint security tool to conduct forensics at scale during incident response operations, Mandia said. But the company's true IP, Mandia said, is its knowledge of what's going on right now in the threat landscape, which makes it possible for FireEye to assess if customers are vulnerable to attacks and what orchestration needs to happen to help clients get secure.

"The organizational changes that we've made within FireEye will improve our pace of innovation and our ability to deliver and execute," Mandia said.

FireEye's sales for the quarter ended June 30 climbed to $217.6 million, up 7.4 percent from $202.7 million the year prior. That edged out Seeking Alpha's estimate of $215.5 million.

The company recorded a net loss of $67.3 million, or $0.33 per diluted share, which is a 7.6 percent improvement over a net loss of $72.9 million, or $0.38 per diluted share, last year. On a non-GAAP basis, the company recorded a net loss of $1.7 million, or $0.01 per diluted share, down from net income of $488,000, or unchanged on a per share basis, the year prior. Seeking Alpha had been projecting non-GAAP net income of $0.01 per share.

FireEye's stock plummeted $2.30 (14.3 percent) to $13.80 in after-hours trading Tuesday. That's the lowest FireEye's stock has traded since November 2017.

Product, subscription, and support revenue for the quarter jumped to $174.1 million, up 4 percent from $167.4 million last year. And professional services revenue climbed to $43.5 million, up 23.4 percent from $35.3 million the year before.

For the coming quarter, FireEye expects to record non-GAAP diluted net income of $0.00 to $0.02 per share on sales of between $217 million and $221 million. Seeking Alpha had been projecting non-GAAP net income of $0.07 per share on revenue of $228.8 million.

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