New FireEye Pricing Model: CEO, CFO Predict Partner Momentum
FireEye’s new pricing model for network, email and endpoint security products is showing progress with channel partners, and that momentum is expected to accelerate throughout the year, according to CFO Frank Verdecanna.
The comments surfaced during FireEye’s earnings call yesterday. For its Q1 2018, revenues were $199 million, up 8 percent from the corresponding quarter last year. Also of note: Annual recurring revenues hit $500 million, up 14 percent compared to the end of Q1 2017.
FireEye introduced a new pricing and packaging model at RSA Conference in April 2018. “While not all customers will move to the new pricing model immediately, the early response from customers, channel partners and industry analysts has been very positive,” CEO Kevin Mandia said during yesterday’s call.
New FireEye Pricing Model
Key points of the pricing model include:
- For midmarket customers with up to 2,000 users, the FireEye Security suite includes cloud versions of Network, Email and Endpoint Security products as well as Helix.
- For larger customers, FireEye has introduced a single subscription price based on the appropriate consumption metric, the company says. Network Security is priced per megabit per second. Email Security is offered on a per mailbox basis. Endpoint Security is priced based on the number of devices protected. Virtual and cloud sensors are included at no additional cost, and each subscription includes an entitlement to Helix, the company says.
- Appliance hardware is available as an add-on purchase by subscription or outright purchase and is priced on a cost plus model.
- For the first time ever, FireEye customers now have the option to subscribe to any of the company’s products.
“This new pricing model encourages broader deployments of our technology, offers the flexibility to mix and match physical and virtual appliances, and allows customers to optimize capacity as needed,” Mandia asserts.
Will Partners Embrace Pricing Model?
During FireEye’s previous analyst day, the company indicated that partner-led sales accounted for just over about $45 million in Q4 revenues, according to an analyst on yesterday’s call. That analyst asked if partners would embrace the new pricing model and provide more revenue lift.
“Yeah. I think we do definitely expect as we go throughout this year that the new pricing and packaging and the investments we’re making in some of the channel partnerships that we’re going to continue to see more and more channel leverage. The channel leverage story has been improving over the last year. I think we still have a long way to go and a lot of opportunity there. But we are starting to see some good signs there.”
Although FireEye added slightly fewer new customers in Q1 2018 vs. Q1 2017, the company is already seeing a “healthy increase in new customers so far in Q2 as channel partners begin to gain momentum selling our cloud Endpoint and cloud Email subscriptions,” Verdecanna also mentioned.
On the strategic relationship front, FireEye was careful not to hype a new alliance with Oracle, which also surfaced at RSA. Referring to that deal, Mandia said: “I think it’s too soon to tell in the partnership as to how that’s going to play out, but I’m glad we did it. I think that you want to give your customers choice as to what cloud you are performing in, and we just added another to that list.”
FireEye has spent the past year or so striving to strengthen its partner relationships, some of which became strained after the company acquired Mandiant for forensics expertise.