The positive impact of cloud growth on the business
FireEye (FEYE) continues to gain from the high proliferation of cloud technology across various organizations. The company’s flexible cloud delivery platform, which includes both public and hybrid clouds, continues to boost customer growth and drive billing for the company.
The graph above shows the book-to-billings trend for FireEye in the last five quarters. In the previous two quarters, the ratio was above one. During the period, the overall billings for the company have also increased at a CAGR (compound annual growth rate) of 4.8%. Moreover, the company’s increased focus on a subscription-based model has further contributed to cloud subscription growth.
In addition, the company’s strategic alliance with Oracle’s (ORCL) cloud platform has helped the cybersecurity provider to make its cloud email solution available in Oracle’s SaaS (software-as-a-service). Going forward, FireEye also believes that it may partner with other cloud service providers to offer better service to its clients.
Can the cloud platform penetrate the mid-tier segment?
The price-sensitive mid-tier segment has always been quite challenging for FireEye. Moreover, cutthroat competition, which exists in the mid-level market from both large and mid-sized cybersecurity firms like Palo Alto (PANW) and Fortinet (FTNT), has further made it difficult for FireEye to operate, particularly in terms of higher operational costs.
Thus, the availability of the cloud platform has made it easier for the company to access the mid-tier segment. It may not just reduce its software delivery cost but could also allow the company to compete with its peers.