FireEye Credits Channel For Bringing In Record Number of Customers

FireEye said its channel partners took advantage of the company's new subscription pricing options to onboard a record number of clients in the mid-market.

The Milpitas, Calif.-based platform security vendor has invested in and signed up a fair number of mid-market customers over the past few years, but FireEye's recruitment efforts in that market improved dramatically in 2018 once the company rolled out a simplified pricing and packaging process, according to Frank Verdecanna, chief financial officer and chief accounting officer.

"That really has resonated with the channel," Verdecanna told Wall Street analysts during the company's earnings call Wednesday. "It was definitely a pretty big uptick in the quarter."

[Related: FireEye Looks To Gain Traction In Midmarket Through Simplified Pricing, Packaging Models]

FireEye last year introduced subscription pricing options for its network, email, and endpoint security products, according to Verdecanna. And FireEye's new customers sourced through the channel are almost all buying using the company's new subscription pricing model, he said.

The company invested heavily in 2018 in both sales enablement and changing the pricing options to enable both FireEye's internal sales team as well as the channel to reduce friction in the selling process, according to Verdecanna. Those efforts have really paid off, he said, with FireEye adding 354 new customer logos in the fourth quarter of 2018, up 19 percent from the same quarter last year.

The new subscription-based pricing helped drive double-digit growth in the network, endpoint, and email security categories despite appliance hardware sales declining by 11 percent in the most recent quarter, Verdecanna said. And the percentage of FireEye's billings coming from subscriptions increased from 37 percent in 2017 to 42 percent in 2018, according to the company.

"We are extending our reach into the mid-market through the channel," Verdecanna said.

FireEye sales for the quarter ended Dec. 31 climbed to $217.5 million, up 5.7 percent from $205.8 million the year prior. That edged out Seeking Alpha's estimate of $216.8 million.

The company recorded a net loss of $48.4 million, or $0.25 per diluted share, some 31.2 percent better than the net loss of $70.4 million, or $0.39 per diluted share,it reported last year. On a non-GAAP basis, the company recorded net income of $11.5 million, or $0.06 per diluted share, up 4.6 percent from $7.9 million, or $0.04 per diluted share, the year prior. That beat a Seeking Alpha projection of $0.05 per share.

FireEye's stock tumbled $1.33 (7.22 percent) to $17.09 in after-hours trading. Earnings were released after the market closed Wednesday.

Product, subscription and support revenue for the quarter jumped to $178.8 million, up 4.6 percent from $171 million last year. And professional services revenue climbed to $38.7 million, up 11.1 percent from $34.8 million the year before.

For the coming quarter, FireEye expects to record a non-GAAP net loss of $0.02 to $0.04 per share on sales of between $208 million and $212 million. Seeking Alpha had been projecting non-GAAP income of $0.01 per share on revenue of $211.6 million.