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Mandiant Forges Bond With Microsoft As FireEye Sale Nears

‘Decoupling Mandiant expertise from FireEye products was one of the key purposes behind the strategy of divestiture, and we are seeing with Windows Defender our first big technical partnership,’ says FireEye CEO Kevin Mandia.

Mandiant has struck paydirt wrapping its managed detection and response services around Microsoft’s endpoint security technology as the sale of its FireEye products business nears.

The Milpitas, Calif.-based platform security vendor said a quarter of new Managed Defense customers last quarter were using Mandiant’s MDR services alongside Microsoft’s Windows Defender endpoint security product. Mandiant’s services had for years been wedded to FireEye’s network, endpoint, and email security tools, but that has changed, with Mandiant and Microsoft forging an alliance in April.

Decoupling Mandiant expertise from FireEye products was one of the key purposes behind the strategy of divestiture, and we are seeing with Windows Defender our first big technical partnership,” FireEye CEO Kevin Mandiant told investors Thursday. The company agreed in June to sell its products business to Signature Technology Group (STG) for $1.2 billion, and the deal is slated to close by the end of 2021.

[Related: FireEye CEO: ‘We’ve Never Been More Relevant Or More Needed’]

Mandiant expects to wrap its Managed Defense services around at least one more endpoint security product by the end of the year as the company embraces its newfound freedom to deliver truly vendor-agnostic services, Mandia said. The company’s Automated Defense extended detection and response (XDR) platform already works with more than 70 third-party technologies, according to Mandia.

But before Mandiant wraps its managed services around another vendor’s products, Mandia said the company likes to do a bunch of testing first to make sure the integration can scale. Mandiant plans to take a strategic approach to expanding its support capabilities, Mandia said, with an initial focus on overlaying Mandiant’s intelligence and expertise on products that are seeing very widespread adoption.

Mandia said the company’s salespeople will be way more productive selling Mandiant’s services and solutions once the company divests its FireEye products business. Mandiant has the top intelligence and incident response practices in the world, and Mandia said offerings like Automated Defense benefit from those best-in-class capabilities.

“With focus will come better results,” Mandia said. “We’re doing all the right things there to get that focus and to get the training that our sales professionals need.”

FireEye sales for the quarter ended June 30 surged to $248 million, up 7.9 percent from $229.9 million a year earlier. That fell short of Seeking Alpha’s revenue projection of $249.1 million.

The company’s net loss increased to $69.3 million, or $0.29 per diluted share, 30 percent worse than a net loss of $53.3 million, or $0.24 per diluted share, the year prior. On a non-GAAP basis, net income climbed to $22.1 million, or $0.09 per diluted share, up 9.1 percent from $20.3 million, or $0.09 per share, the year prior. That was in line with analyst expectations, according to Seeking Alpha.

FireEye’s stock plunged $2.25 (11.2 percent) to $17.84 per share in after-hours trading Thursday. That’s the lowest the company’s stock has traded since Dec. 17, 2020.

FireEye’s product revenue inched ahead of $134 million, up 1 percent from $132.7 million the year prior. Net income for the FireEye product business dipped to $34.4 million, or $0.15 per share, down 6.2 percent from $36.7 million, or $0.17 per share, the year prior. The $1.2 billion sale of the FireEye products business to private equity firm STG is expected to close in the fourth quarter of 2021.

Sales for the company’s Mandiant Solutions business surged to $113.9 million, up 17.2 percent from $97.2 million last year. Net loss for the Mandiant Solutions business worsened to $103.7 million, or $0.44 per share, 15.2 percent worse than $90 million, or $0.41 per share, the year prior. After the FireEye products sale closes, the company will be renamed Mandiant and continue to be publicly traded.

Mandiant’s professional services revenue surged to $62 million, up 26 percent from $49.2 million last year. And Mandiant’s platform, cloud subscriptions and managed services revenue climbed to $51.9 million, up 8.1 percent from $48.1 million the year prior.

In the current quarter, Mandiant expects a net loss of between $0.14 and $0.16 per share on sales of between $118 million and $122 million. FireEye’s products business is expected to see non-GAAP net income of between $0.19 and $0.21 per share, for non-GAAP net income of between $0.05 and $0.07 per share for the whole company. Analysts had projected non-GAAP net income of $0.11 per share.

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