FireEye, Partners See Big Shift Toward Security Subscription Services In Q1

FireEye saw a significant jump in demand for subscription-based security solutions in the first quarter of 2016 -- a trend company executives said Thursday would play an even greater part of its strategy going forward as it transitions CEOs.

Product billing subscriptions for the quarter were up 39 percent year over year, to $88 million, the company reported. Total non-GAAP billings for the quarter, which ended March 31, were $186 million, a rise of 23 percent year over year.

FireEye continues to see that acceleration grow around subscription solutions, CEO Dave DeWalt said on the company's earnings call Thursday, driven by a move from on-premise to cloud solutions and demand for self-service or managed IT solutions. DeWalt said FireEye is well-positioned to take advantage of these shifts in security, as shown by the company's subscription growth this quarter.

[Related: FireEye CEO Dave DeWalt To Step Down, Kevin Mandia To Take Top Leadership Role]

"It is just a matter of time for all for all of these other companies to see the change I'm seeing. ... Whatever company gets to the other side and has a cloud and security-as-a-service model will win the next game. I believe [FireEye] has put these pieces in place," DeWalt said.

Examples of that success included an eight-figure cloud email deal in the federal space to protect more than 100,000 mailboxes, a threat analytic platform that replaced a legacy SIEM solution and a competitive win against a traditional firewall solution, DeWalt said.

Multiple partners told CRN that they are also seeing increased demand for FireEye-as-a-Service solutions, though many said they are struggling to sell the company's on-premise solutions.

Sales overall for the quarter were $168 million, up 34 percent year over year. Net loss for the quarter was $155 million.

FireEye also said on its earnings call that DeWalt would be stepping down as CEO, replaced by current President Kevin Mandia as of June 15. DeWalt will then serve as executive chairman. The company also named Mandiant President Travis Reese as president of FireEye and said that CFO Mike Berry would be assuming the responsibilities of chief operating officer.

"With a solid foundation of people, technology and partners in place, this is exactly the right time to make this move," DeWalt said. "With our management success assured and transformational products on our road map, I believe our future is very bright,"

When he assumes the role, Mandia said, he plans to focus on driving innovation, expanding platform capabilities, building a leaner organization, expanding internationally and working better with partners.

"We will continue to evolve and do what we need to do to build what the market needs," Mandia said on the call.

FireEye said it expects sales for the second quarter to be between $178 million and $185 million. It expects billings to be between $200 million and $215 million. It expects non-GAAP net loss per share to be between 38 cents and 40 cents.

FireEye also revised its 2016 guidance, dropping revenue guidance to between $780 million and $810 million. It said it expects billings for the full year to be between $975 million and $1.055 billion. It expects non-GAAP loss per share to be between $1.20 and $1.27.