Veteran FireEye President Travis Reese To Exit In Executive Reshuffling
‘Travis and I have shared a brain for 20-something years,’ FireEye CEO Kevin Mandia says. ‘I think I knew his habits better than I knew my wife’s habits. So there’s going to be total continuity in the mission and the things we put forward.’
Longtime FireEye second-in-command Travis Reese will retire March 1 as the platform security giant tightens its org chart to accelerate execution and drive operational discipline.
“When you’re putting in seven days a week, 24 hours a day, there comes a time where you say, ‘Hey, it’s time for me to step out of the river, be an adviser for a while, and step back in,’” FireEye CEO Kevin Mandia told investors Wednesday. “It’s been a 14-year run for Travis. And when folks get to that point, all I can do is salute and respect.”
Reese has served as Mandia’s top lieutenant since February 2006, first at incident response and security consulting Mandiant and then at FireEye after the former was bought by the latter for $1 billion in early 2014. But the connection between Reese and Mandia actually goes all the way back to 1996, when the two served alongside one another in the United States Air Force.
[Related: FireEye Restructures To Drive Growth Around Vendor-Agnostic Services]
“Travis and I have shared a brain for 20-something years,” Mandia said. “I think I knew his habits better than I knew my wife’s habits. So there’s going to be total continuity in the mission and the things we put forward.”
Reese has agreed to provide ongoing advice and consulting service to FireEye for a year following his departure from the company is exchange for a cash payment of $50,000 as well as 7,500 restricted stock units, according to a filing with the U.S. Securities and Exchange Commission.
“When we’re 80 years old and on the front porch, we’ll be talking about FireEye,” Mandia said. “Travis and I will always work together, and we’ll always benefit from his guidance.”
To help replace Reese, FireEye has brought in former longtime Vertical Communications CEO Peter Bailey to serve as executive vice president and chief operating officer. Mandia said Bailey - who will receive an annual base salary of $400,000 - will be tasked with driving the operational discipline necessary to support FireEye’s growth and accelerate the company’s transformation.
Specifically, FireEye is looking to reduce operational expenditures by $20 million to $25 million over the coming year by cutting up to $50 million of costs from slower-growing portions of the company’s business while investing $25 million to $35 million in high-growth areas for FireEye, according to Frank Verdecanna, FireEye’s executive vice president, CFO and chief accounting officer.
In addition, FireEye is promoting Bill Robbins from executive vice president of worldwide sales to chief revenue officer and general manager of products. This will allow the FireEye to unify its product, customer success, marketing and sales organization under a single leader and help the company grow its platform, cloud and services offering.
“When you’ve got to execute and execute quickly, you reduce your span of control and you roll,” Mandia said. “And that’s what we’re doing as an organization, we’re going to the most senior executives, and we’re tightening the org chart to execute quicker.”
FireEye sales for the quarter ended Dec. 31 climbed to $235.1 million, up 8.1 percent from $217.5 million the year prior. That beat Seeking Alpha’s estimate of $226.6 million.
The company recorded a net loss of $49.2 million, or $0.23 per diluted share, 1.7 percent worse than a net loss of $48.4 million, or $0.25 per diluted share, last year. On a non-GAAP basis, FireEye earned net income of $14.8 million, or $0.07 per diluted share, 29 percent better than net income of $11.5 million, or $0.06 per diluted share, a year earlier. That edged out Seeking Alpha’s projection of $0.04 per share.
On a full-year basis, FireEye’s revenue jumped to $889.2 million, up 7 percent from $831 million for the year prior. The company recorded a net loss of $257.4 million, or $1.24 per share, 5.9 percent worse than the net loss of $243.1 million, or $1.27 per share, a year earlier.
FireEye’s stock dropped $0.75 (4.69 percent) to $15.25 in after-hours trading Wednesday. That’s the lowest the company’s stock has traded since October.
Product, subscription and support revenue for the quarter inched ahead $185 million, up 3.5 percent from $178.8 million the year prior. And professional services revenue jumped to $50.1 million, up 29.4 percent from $38.7 million last year.
For the coming quarter, FireEye expects to record a non-GAAP net loss of $0.03 to $0.05 per share on sales of between $222 million and $226 million. Analysts were expecting FireEye to break even from a profitability standpoint on revenue of $223 million, according to Seeking Alpha.