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Home / Business / FireEye revenues impacted by cloud upgrades and renewal rates are falling

FireEye revenues impacted by cloud upgrades and renewal rates are falling



FireEye Inc. announced on Tuesday afternoon that the unexpectedly high cost of migrating data to the cloud and the headwinds of smaller customers for migrating to updated services weighed on the result, forcing the cybersecurity firm to increase its earnings forecast for the year reduce.

FireEye

FEYE, -0.49%

Equities fell 13% on the release of direct trade out-of-hours results after normal trading hours fell 0.5% to $ 16.10. The stock fell 12% on Wednesday before entering the market.

The company has had some issues with some customers upgrading from a product that no longer supports it, Chief Executive Kevin Mandia said in an interview on Tuesday.

"The devices that we launched five or six years ago had headwinds and some renewals on smaller customers," said Mandia Cloud offers, and we just needed to expand them faster so I could get more into the Invest in the future of the company while reconciling some of the challenges of renewal with smaller customers, "said Mandia.

] The Company reported a loss of $ 67.3 million, or 33 cents per share, in the second quarter, compared to a loss of $ 72.9 million, or 38 cents per share, for the same period last year. FireEye reported an adjusted loss of one cent per share. Analysts polled by FactSet had forecast a profit of one cent per share, and FireEye had forecast a break-even profit of 2 cents a share for the second quarter.

Revenues increased from $ 202.7 million in the year-ago quarter to $ 21

7.6 million, while Street reported revenue of $ 215.2 million to $ 217 million, according to FireEye.

Adjusted settlements increased from $ 196.1 million a year earlier to $ 221.4 million. Wall Street was looking for $ 213.8 million after FireEye had forecast bills of $ 207 to $ 222 million.

Customers subscribing to FireEye's third-party security service released in 2012 had to upgrade to the company's fifth security service -generation service, resulting in unexpectedly low renewal rates, especially for smaller customers, said Frank Verdecanna, chief financial officer from FireEye, in an interview.

Faster internal data updates for FireEye traffic also increased costs.

"We moved all traffic on our cloud services from our internal data centers to a public cloud provider, and pretty quickly," Verdecanna said. The primary cloud provider was Amazon.com Inc.'s

AMZN, -0.73%

AWS. "This has substantially increased our costs as we continue to run internal data center costs for a quarter of an additional quarter."

Higher commissions for new customer sales to sales reps compared to commissions paid for renewals also contributed to the bottom line of FireEye.

"So in the new business we are over-scheduled for the coming year and sub-scheduled for the renewal period," Verdecanna said.

For the third quarter, FireEye expects a revenue contribution of $ 217 million to $ 221 million and bills from $ 245 million to $ 255 million, with a balanced result of 2 cents. Analysts predicted a profit of 7 cents with a revenue share of $ 228.4 million and settlements of $ 249.4 million.

For the year, FireEye projected a 4-cent gain on revenue of $ 865 million to $ 875 million, and settlements of $ 935 million to $ 955 million. Wall Street was looking for a 15-cent consensus on sales of $ 893.5 million and a $ 943.1 million settlement.

At the end of May, FireEye announced it had taken over the security instrumentation firm Verodin from 12 cents to 16 cents, with a revenue share of $ 890 to $ 900 million and bills of $ 935 to $ 955 million.


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