Mandiant, Inc.
Q2 2019 Earnings Call Transcript

Published: 31 Jul 2019

[Operator:]

Good day, everyone and welcome to the FireEye Second Quarter 2019 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. Also, this call is being recorded. At this time, I would like to turn the call over to Kate Patterson. Please go ahead.

[Kate Patterson:]

[Kevin Mandia:]

Thank you, Kate, and thank you to all the investors, employees, customers and partners who are joining us on this call. We appreciate your continued interest and support as we continue to transform our company. The second quarter of 2019 marks the 10th straight quarter where we met or exceeded our billings and revenue guidance ranges. Billings was at the high-end of our guidance range and revenue exceeded our guidance range. However, our operating income, operating margins and earnings per share were slightly below our guidance ranges. We will provide you details, while we did not meet these expectations, but first I would like to share some highlights from the second quarter. We posted year-over-year growth in all billings categories. We generated billings of $221 million, a 13% increase year-over-year and a 19% increase excluding a $10 million transaction we had in the second quarter of 2018. Revenue is $218 million, a 7% increase year-over-year. Results were especially strong in our platform, cloud subscriptions, and managed services category with billings growth accelerating 27% from a year-ago. Managed defense had its best ever second quarter and its third highest billings quarter in our history. Threat intelligence had a very strong quarter growing ARR 20% year-over-year. And Mandiant services had its second highest billings quarter in our history, billings for our professional services were $46 million, up 15% year-over-year. We booked 45 transactions greater than a $1 million with customers diversified across vertical markets and geographies. And nearly two-thirds of these $1 million plus deals in the second quarter included services or expertise on demand. Our overall transaction volume increased with both Global 2000 customers as well as in the mid market and we added 261 new customers in the quarter. From a sales perspective, the first half of 2019 was the best first half in FireEye's history. Our results this quarter, especially the strength of our platform, cloud and managed defense category as well as our professional services, show how far we have come as a company over the past three years. FireEye has continued to evolve from our origin as a network security product vendor to a comprehensive security platform company. We’ve been taking actions to build a strong foundation for our future and extend our influence as trusted security advisors. As we transform our company, two related, but different areas of focus have emerged within FireEye. First, we have products consisting of our advanced detection and protection products such as network, email and endpoint security; and second, we have platform and solutions that combine our Helix platform, security instrumentation from Verodin, Mandiant services, intelligence and our managed defense offerings.

[Frank Verdecanna:]

Thanks, Kevin, and hello to everyone on the call. First I want to frame my remarks with a few general comments on our business outlook and financial model. First, as it had for several quarters, our business continues to diversify across customer size, product families, geographic regions and verticals. We continue to add new logo customers in every product family and many of our existing customers are deploying more product families. These healthy demand trends are reflected in the growth in billings, which is a leading indicator as well as in our outlook for billings and cash flow for the rest of the year.

[Operator:]

Thank you. And our first question comes from Gur Talpaz with Stifel. Your line is now open.

[Christopher Speros:]

Hi. This is actually Chris Speros on for Gur. Kevin, normalized billings growth of 20% is encouraging. Can you talk about the degree to which adoption of expertise on demand contributed to growth in Q2 and how the pace of adoption has progressed versus your internal target?

[Kevin Mandia:]

Yes, I think our expertise on demand is meeting our expectations. I think, Chris, what we have to do to see the kind of growth I want to see there is embedded into all our technologies. Right now it's available in the cloud, Helix that we have. We can press the button, interact with our experts. But when I say embed, I mean your inside our endpoint technology, you’re looking at something you don't understand and there's a big red button there it says, hey, click here to get a forensic review; click here to get help. So we're working on that path and I expect to see more growth as our tech embeds expertise on demand into it. What we did see and what I did mention in my direct remarks was about two-thirds of a $1 million plus deals have services and expertise on demand in it. And I want to reiterate that expertise on demand, the whole goal of that is into sell more services, if that's the kind of product I want to buy. If -- I’ve done my thousands of hours of sit inside a security tech and every time you’ve a question, you don’t want to bounce on paperclip, you just want to hit a button and get somebody with real expertise at scale that solves problems for dozens, if not hundreds of companies at your fingertips. So right now I still think its early stages. We have the back end complete. And what I mean by that is when you make a request to FireEye for expertise on demand, it's almost like an all points bulletin whether you email or call or click on the chat in Helix, it's we're trying to get a triage so that you get the right expert when you need the most. So our Intel folks are involved, our Mandiant services folks are involved. We have a team called TORE, which is I think threat operations reverse engineering, we have an advanced practices team for detection, we just go on and find the right expert. That's well oiled machine inside of FireEye now. And now it's the tech getting these icon buttons I'm oversimplifying it, but just making a way for our customers inside our products to seemingly communicate with our experts is what we're trying to do with our next gen Helix and with future releases of our products. So that -- that's the long answer to your short answer of it was within my expectations of how it did. And I think that it takes off when it's really truly embedded in our technology.

[Frank Verdecanna:]

That said, Chris, we did see very nice sequential growth and we did almost double our customers on expertise on demand. So it did kind of meet our plan where we're expecting to do, but pretty good metrics there.

[Christopher Speros:]

That's great color. And Frank, with all the moving pieces in the model that have more or less led to the top line guide down and the effects on profit of that facility in the second half of the year, do you believe that Verodin can still contribute $70 million to billings and be accretive to both operating income and cash flows in 2020?

[Frank Verdecanna:]

So couple of things, Chris. One is that the guide down was only on revenue. Again, the leading indicator of billings was reiterated guidance there. As far as Verodin growth, Verodin is actually slightly better than we expected on both billings and revenue in the quarter. FireEye still met our expectations on a standalone basis, but I think as we look at Verodin throughout the remainder of 2019 and for 2020, we feel very good with the guidance we gave out in May.

[Christopher Speros:]

All right. Thanks, guys.

[Kevin Mandia:]

Thank you, Chris.

[Operator:]

Thank you. And our next question comes from Saket Kalia from Barclays Capital. Your line is now open.

[Saket Kalia:]

Hey, guys. Thanks for taking my questions here.

[Kevin Mandia:]

Hi, Saket.

[Saket Kalia:]

Maybe -- hey, Kevin. Hey, Frank. Hey, Frank, maybe just to start with you, can you just talk about the renewal rate on attached subscription and support. I know you talked to some of the generational change there in appliances on how that affected some ARR this quarter, but generally speaking, how do you think about the renewal rate on that attached subscription and support line going forward?

[Frank Verdecanna:]

Sure. I think we will see stabilization of it, but I think in the second quarter we did see a $20 million sequential decline in ARR for the product and related. But again, the primary driver of that was the fact that we did end the life of the third-generation appliances, so customers really only have the option of refreshing those appliances which did for some non-renewals. The really good news here is there's only $3 million left in our ARR relating to the third-generation appliances. So I don't think we see that impact going forward.

[Saket Kalia:]

Okay. That's helpful. Kevin, maybe for you. You touched on this in your prepared comments just about realigning the company into platform and products. As you look out, I don’t know a year from now, what are the sort of benefits you would like to see from that realignment and what sort of potential synergies could you gain from kind of separating those -- that platform group and that product group.

[Kevin Mandia:]

Yes, by the way we’ve been on that transformation, Saket, since I got the job three years ago. I think we're doing a great job stabilizing our core products at the same time frame, we took it under our wing saying, hey, we got to build a platform and we got to find way to decouple our Intel and get it into the platform and we've got a -- basically I wanted to create what I call it at the time Security-as-a-Service and a different way to transact and different way to do business with us and we're still building that. And the bottom line is that looked at this business and we are managing it, I kept thinking we're stabilizing core products, but we got to invent something new and bring that to market, overlays our Intel, decouples our detection from spoke products. It enables expertise on demand in power security instrumentation, all those things that's a new product for us that we started building back in -- we started adding to it, but we started focusing on it back in 2016. We got Helix first gen out and then we’ve done a full inorganic and organic refresh to that product with the extra team purchased, so that we can combine big data with our data scientists with the command center that we call our security operations with our orchestration. So bottom line work in progress. By aligning the groups, you almost look at how they go-to-market. We have spoke products to go-to-market one way, endpoint competes against endpoint, network competes against firewall and cloud and email competes against the email stuff. But then we had this platform that quite frankly operates independently with the spokes. It's more spoke agnostics. With Verodin it's really going to be spoke agnostic. Its genuine, they’re going to run the attacks and give you, here is the results of it. And it's not going to favor FireEye's spoke products over anybody else's. It's going to be honest, it's going to have integrity and its going to be real. And that's the same for our expertise on demand. I mean, we don’t need to just leverage data from our products to help our customers on a daily bases we're solving the most complex security problems and we are using a lot of tech beside FireEye tech. Its whatever has been in the infrastructure of our customers for the last 5 to 10 years, we got to rely on that as well. So the goal of this company has always been to go from spoke network security sandbox company to a genuine comprehensive security platform company, where what I believe every customer wants to buy is very simply they want somebody back stop their capabilities and be there when you need them. And at the same time frame simplify integrate and test your security architecture. Let's just align their groups that way and get them functioning more aligned with how we go-to-market. So we put Grady Summers our CTO in charge of our -- what I call, core products, network, endpoint, email and SIM and then get the expertise part of the business working more with Verodin in the platform, spokes -- spoke agnostics and let them run.

[Saket Kalia:]

Makes all the sense. Thanks, guys.

[Kevin Mandia:]

Thanks, Saket.

[Operator:]

Thank you. And our next question comes from Sterling Auty with JP Morgan. Your line is now open.

[Sterling Auty:]

Yes, thanks. Hi, guys.

[Kevin Mandia:]

Hi, Sterling.

[Sterling Auty:]

If I just try to think about this simply, billings as revenue plus the change in deferred revenue. You reiterated billings, but the revenue is going down. So that means that the deferred revenue contribution in the back half of the year has to be stronger, what's the -- we focused on end of life of third gen. What’s the thing that's coming in much stronger than what you originally thought when you gave the billings guide initially to now.

[Frank Verdecanna:]

Well, the two things. On the positive side, so I did say, Verodin little bit better than expectations in the second quarter. The other major thing is our cloud, our platform and cloud subscriptions and managed services really nicely. And so we are now seeing the impact of that growth on the billing side over the last couple of years. We had in the second quarter, we had 27% year-over-year growth in that category.

[Sterling Auty:]

Okay. And then the follow-up is, when you’re thinking about the end of life was this always the plan in terms of the timing of end of life in terms of third gen. And what is it that really put you guys by surprise to see the magnitude of the change?

[Frank Verdecanna:]

So this was the timing of the end of life. I think what caught us by surprise is really the expected number of refreshes was less than we saw in previous end of life processes. So we basically, end of life that it's the very end of Q1 and the beginning of Q2. And so that really we anticipated some activity in Q2 that just didn't happen. And again, it was primarily focused on smaller customers, but ultimately that impact has a pretty significant impact for the back half of the year.

[Sterling Auty:]

Okay. Thank you.

[Kevin Mandia:]

Thanks, Sterling.

[Operator:]

Thank you. And our next question comes from Gregg Moskowitz of Mizuho. Your line is now open.

[Gregg Moskowitz:]

Okay. Thank you very much and good afternoon guys. So …

[Kevin Mandia:]

Hi, Greg.

[Gregg Moskowitz:]

… getting back -- hey, Kevin. So getting back to platform business and as you mentioned it was up 27% reported, it was also up 65% if you back out the eight figure deal from a year-ago. So my question here is how broad-based the growth was in Q2 as well as if you could speak to the sustainability of significant double-digit growth in the platform category going forward?

[Frank Verdecanna:]

Yes, so the two things on that. I think we had -- we really had a great quarter across the whole category. I think if you look at each of the individual components of that they really have strong quarters. We had 20% ARR growth in the Intel side. We had really strong managed defense quarter as well. And then just across if you look at Verodin was a nice contribution, obviously, first initial contribution to the quarter. And our expectation is consistent with our long-term model and that we expect that growth -- that group and category to be the accelerating billings and revenue component.

[Gregg Moskowitz:]

Okay got it.

[Frank Verdecanna:]

So we do believe that sustainable.

[Gregg Moskowitz:]

Great. Thank you. And then just as a follow-up …

[Kevin Mandia:]

And Gregg, just little color on that. Just tons of relevance there. When you look at what all the security practitioners want right now, the number one question I get in every board room or even talking is how good am I, how good do I need to be at security? You test it. And the Verodin platform is totally relevant. And then Frank mentioned in his direct remarks you may have missed it. I think it's the fifth quarter in a row Mandiant services had its record revenue quarter, at five quarters in a row. And that's not just because we respond to breaches. Most people think Mandiant, that's what they do for eliminated respond to every breach that matters. But when you respond every breach that matters, it makes you exceptional at the strategic consulting aspects of it as well, then our threat intelligence is relevant. There is a day in my career right, I always thought maybe attribution doesn't matter. Right now when you’re compromised or being attacked and you know that the first thing you want is the context as to who might be and what might the risk be. So just the relevance of what and I can keep going, but I will stop so we can address everybody's questions and get the models right. But the relevance inside that category is high and that's why I feel very confident that we can grow it at market rates or above.

[Gregg Moskowitz:]

Okay. That's really good perspective. Thanks, Kevin. And then just one other -- one follow-up I had just on duration. So you guys spoke to and so I -- actually a significant increase in average term length for your product and subscription billings and you talked about kind of more of an appliance mix shift. What are you assuming with respect to average contract length for the second half of the year as part of your billings guidance? Thank you.

[Frank Verdecanna:]

So, Gregg, I think we'd assume there will be a little bit more normalized to the previous few quarters. So I think, overall, in the recurring subscriptions or in that 24 to 26 area, the product related had ticked up to 29 months I think you will see that come back down probably to the 24 to 26 months.

[Gregg Moskowitz:]

Perfect. Thank you.

[Operator:]

Thank you. And our next question comes from Shaul Eyal with Oppenheimer. Your line is now open.

[Shaul Eyal:]

Thank you. Hi. Good afternoon.

[Kevin Mandia:]

Good afternoon.

[Shaul Eyal:]

As you -- hey, thanks. Despite the reduced outlook, I think one of the questions investors have in mind specifically today in light of the Capital One sizable breach that was reported earlier, did you guys get a call on the incident response side of the equation?

[Frank Verdecanna:]

We wouldn’t be able to comment to that. We have an NDA with all our customers. We’ve been in the business for 20 years to help people solve complex problems quietly and discreetly and we are going to stay in that business.

[Shaul Eyal:]

Fair enough. And do you think that some of the issues, billings healthy, but revenue outflow down. Does it have to be with a super competitive arena? Clearly, there are some new market entrants playing for an extend in your domain as well. Could that be part of the reason?

[Frank Verdecanna:]

I think, I'm sure some of the pressure on the renewals on the end of life appliances, has to do with the competitive landscape on the network and email side. Those -- the non-renewals were pretty much focused primarily on those two areas. But I think if you look at our continued innovation in those areas as there becomes new entrants in those markets our products get more competitive as well. And that’s why you’re seeing a lot of new business in network and email as well.

[Shaul Eyal:]

Got it. Understood. Thank you so much.

[Kevin Mandia:]

Thank you, Shaul.

[Operator:]

Thank you. And our next question comes from Rob Owens with KeyBanc Capital Markets. Your line is now open.

[Rob Owens:]

Great and thanks for taking my question. I think you might have answered part of it, but you had mentioned earlier that this was activity on smaller customers. It does feel like $25 million, a lot of smaller customers or a lot of activity. So those were mainly competitive losses in your opinion or are these folks that may transition over to subscription services, maybe help me out a little bit.

[Frank Verdecanna:]

Yes, I think some of them obviously on the email side have transitioned over to our email cloud solution. But we did have -- if you look at the non-renewals, there were primarily smaller customers, but absolutely there was a handful of larger customers as well. And again, I think the good news and the end of this is that’s really only $3 million left at the ARR as of June 30. So we just don't think we can see that big of an impact going forward.

[Kevin Mandia:]

Yes. Rob, this is Kevin speaking. When I noticed the renewal pressure on FireEye's network security, it's primarily at the smaller customers and it's an option to go to a cloud-based service or firewall module.

[Rob Owens:]

And Kevin when you look at the longer-term vision of spoke and then kind of the VIP in the spoke agnostic side, do you think that vision is built out, other capabilities, other spokes you want to add in, or other thing on the -- other capabilities on the agnostic side?

[Kevin Mandia:]

When I think about it, Rob, I just try to oversimplify. What is unique differentiator for FireEye, we know more about the threat actors than anybody based on what. About 200 threat analysts that speak 32 languages in 19 different countries in a global capacity and nearly 400 incident responders that are act -- very near capacity at all times. So we see when all safeguards, technology people and process fail, and I think our true IP should be spoke and vendor agnostic. It's nice to have the spokes, so we can put our own stuff into it. But at the same time frame, we provide a lot more value to our customers if we can get our platform to overlay what we know about the threat actors on a daily basis into their infrastructure regardless of the spokes that they use. So I think that’s the road that we’ve been on for three years. Takes time to build it. And I’m going to try to accelerate us more into that platform and spoke agnostics for our portion as well as we will have the spokes, we need them. When you look at what we do in our incident responses almost 99% of the time, we need our endpoint to do the forensics we do at scale. But I just think our true IP is that knowledge of what's going on right now and what that knowledge can bring us to help customers instrument, are they vulnerable to those attacks, AK Verodin. And if they are, how can we orchestrate so that they're not. And we see what the results of these attacks look like in everybody's tech. And again, we do hundreds of red teams every year, and I still feel that all that knowledge it's just spoke agnostic. That’s why our customer is getting more value from it.

[Rob Owens:]

Great. Thank you.

[Operator:]

Thank you. And our next question comes from Tal Liani with Bank of America. Your line is now open.

[Tal Liani:]

Hi, guys.

[Kevin Mandia:]

Hi, Tal.

[Operator:]

Want to go back to some of the earlier questions that were asking, and I’m thinking about it in simple terms. I’m focusing mostly on the gross margin. What I’m trying to understand and I give you the background for my question. The biggest risk for your company is that you have so much legacy business still in the installed base with very high maintenance revenues of all the contracts and then when these roll off, the renewal is at much, much lower revenues just because the competition right now competitive landscape is very different from two years, three years ago. So the contract size is going to be smaller, if you don't sell anything else and the maintenance renewal is also going to be lower revenues and these are almost 100% margin revenues that are going away just incremental margin. So the question is how much of what I said explains what happened this quarter to margins. And how much of it is not.

[Frank Verdecanna:]

So very little, Tal. I think if you look at the current quarter decrease in gross margin, the primary driver of that was the fact that we absolutely moved. All our cloud traffic from our internal data centers to public cloud provider and we did it very quickly in the quarter. And so that we are basically double paying both are internal data centers in the quarter plus some pretty significant cloud costs. And so that will normalize a little bit because we are optimizing on the cloud side, but we’re also being able to eventually turn off those data center. So I think, it's more of a short-term impact, but the overall, if you look at our discounting over time, even though the landscapes more competitive we’ve been able to continue to keep our pricing and discounting in line.

[Tal Liani:]

Got it. So how long and I apologize which we said in before how long does it take you to turn off if I can call it this way or private data center and migrate everything to public clouds.

[Tal Liani:]

Yes, so the migration to the public. Crowd is almost entirely done on the actual product and solutions side. We actually -- if we look at the next few quarters, I think it's going to take us at least throughout the remainder of this year to get completely out of those related data center. So I think that’s why you see it in the operating margin guidance for 2019. But I think we will be able to normalize that for 2020. So if nothing happen -- nothing else happens and you enter 2020 by -- just by the fact that you, the commission, the current data center, do you think -- and again nothing else happens in terms of mix etcetera, mix of product. I don’t want to assume any other improvement. So if only that happens, will you be able to go back to your margin structure that you had before, or does it had the public cloud, has inherent lower margin that you will have to compensate you have to offset in a different way?

[Kevin Mandia:]

No, I think our belief is that with the right optimization in the public cloud we can get margins similar to our internal operating data center costs. And that’s kind of what our model would show. Yes, there's obviously a level of optimization you need to do as you move that traffic over and you as -- as you partition it and work with the different cloud provider and -- but I think that’s our original kind of thought process there.

[Tal Liani:]

So when you say that you believes the thing 20/20, you will be able to get back to this margin level. Do you assume anything else or you’re only assuming optimization of the public trial.

[Kevin Mandia:]

Optimization and then also getting out of the current data centers that we’re still paying on.

[Tal Liani:]

Yes, that’s what I meant. Okay. Thank.

[Frank Verdecanna:]

Okay. Thank you.

[Operator:]

Thank you. And our next question comes from Erik Suppiger with JMP Securities. Your line is now open.

[Erik Suppiger:]

Yes, I was just wondering about your end point business. How is the competitive dynamics around that and what is the pricing environment for the endpoint these days?

[Kevin Mandia:]

Yes, Frank, and I both jump in, to answer that question. As the guy wrote our original endpoint roadmap back in 2004, right now our endpoint is primarily strongest when you have to do deep dive forensics at scale. And as an open API, so it's also strongest when you’ve security experts as part of your team, as the customer writing to interact with our APIs, I can -- when you look at there's like a Next Gen, end points coming out. And they’re all taking market from what we call the legacy endpoint. So the business grew year-over-year. We still - I’ve said this many times, every endpoint evolves from different places, but we’re just really, really, strong as an EDR endpoint and we are backing into, as I call it, you got to start somewhere niche and you expand. We are backing in the endpoint protection, we’ve done that for windows and we’re expanding that into Mac and Linux over time. But from a forensic standpoint, we work on Mac, Linux, Windows and that's our strength.

[Frank Verdecanna:]

And I haven't seen a lot of -- in the pricing really hasn’t seem to change much of the past few quarters. I think a year-ago, I think it took a leg down, but over the past few quarters, we really haven't seen much price pressure there.

[Tal Liani:]

Very good. Thank you.

[Operator:]

Thank you. And our next question comes from Andrew Nowinski with Piper Jaffray. Your line is now open.

[Andrew Nowinski:]

Great. Thank you. I want to ask a few question on your email product. So it sounds like the increase in cloud hosting costs may have been mostly related to your email solutions. So can you just give us any color on whether your solutions now being used as a primary email solution versus just and then which vendors are you displacing?

[Kevin Mandia:]

So I think in lot of cases we’re still -- second line of defense, because we really just started being able to be a first line of defense in early 2019. So that process is still going. I think we are winning deals as the first line of defense. And I think in a lot of cases, during the legacy, kind of email vendors in that scenario. But I think we continue to innovate on the email product we continue to grow that overall business, both on premise and cloud side.

[Andrew Nowinski:]

Okay. And then just a clarification with regard to your billings. I know you said you had, higher than expected commission cost for your cloud hosting part. And we certainly saw that strong cloud billings growth. But your total billings only came in towards the high-end of the range. So if your cloud billings are more in line with what you’re expecting. Would total billings still have been within your guided range?

[Kevin Mandia:]

So I think, Andrew what you’re focusing on is the higher commission I refer to was the fact that if you look at the mix of new business versus renewals, we had a heavier mix of new business, which has a much higher commission rate than we pay on renewal business. And so we're over our plan on new business under our renewable, and so that had a impact on commission expense.

[Andrew Nowinski:]

I see. Got it. Thank you.

[Kate Patterson:]

And we have time for one more question.

[Operator:]

And our final question comes from Jonathan Ho with William Blair and Company. Your line is now open.

[John Weidemoyer:]

Hi. Thanks for taking my question. This is John Weidemoyer for Jonathan. I have a question on Helix. Can you talk about the -- give some color on the select availability released in the second quarter give some further color on the reception there.

[Kevin Mandia:]

Yes, this is Kevin speaking. I just spoke about -- we’ve about a half dozen customers right now using it for many different use cases. I spoke to the architect today on how that was going. It's a very flexible platform, all installs are going very, very well. The amount of use cases we’re solving is exceptionally broad right now. The good news on that is that every time we saw the used case, we’ve got a playbook that’s portable rather customers. The last and good news on that is my god, people are using this thing to solve a whole lot of problems we didn’t foresee in the first place. But we’ve a very dynamic platform and I'll reiterate this was built on the extra team platform. We did that acquisition over year and half ago, because what I learned is we have a lot of security expertise where we're not a bunch of big data jockeys. So we had to buy big data platform. We put our orchestration capabilities into the big data platform then created a front end to it called command center, marketing did not bless that name yet. But we call a command center, which is almost like a security operations platform. We put all the three together. I left my notes on the results back in the office, but the good news it's up, it's running. Its ingesting data from all over the place to include even the Internet one use case that we thought was pretty cool as a customer is using the next-gen Helix to literally scrape Pastebin for keywords every single day and seeing if certain keywords pop-up in Pastebin. So they know if they have a problem or not and I really haven't heard of any product does anything like that, you would have to have engineers go code that yourselves. So the used cases vary. I’m happy with where it's at. You can never go fast enough, right? I mean, at the end of the day, I will say in the call, I’m happy where it's at. Five minutes after this call, I'll be walking down the hall, telling engineers I want it now, I want it faster. So -- but the installs are going well. We have our best SEs and engineers working on it right now and I’m very pleased with what I’m seeing.

[John Weidemoyer:]

Okay. That’s helpful color. Thank you very much. And just last question. The internal structure changed, my impression the way you described. It was mostly that it wasn't really moving people around so much like engineers to put us more a management, having management oversight at particularly strategic points to direct focus of your lease note folks to get them to match your strategic initiatives. Is -- did I misinterpret? It there a whole lot of underlying people or is it mostly with the management?

[Kevin Mandia:]

Well, its management and there's some people moving underneath. I mean, you always do organizational changes to get alignment for a cause and a purpose. That simple. And the reason we are doing this one is accelerate the platform. We’ve worked years to stabilize a bunch of products, stabilize renewal rates, show some steady growth there. But every time I set this business, I want to accelerate the platform and that's -- it's time to do that. You take incremental steps along the way, so we’ve had ongoing. It's not like we just -- hey, this quarter we’re now focused on it. We’ve taken incremental changes every six months to a year to focus more on the platform and the parts of our business that are celebrating the growth. If I put it under different groups, should -- it is -- you just get better focused. That simple. So that’s the number one reason we did this accelerate growth to the platform. By the way, the prior move was let's have a platform first mentality in a decentralized way. And I just want to centralize it, and Hall.

[Kevin Mandia:]

Okay, great. Okay, got it. Thank you very much.

[Operator:]

Thank you. Ladies and gentlemen, this concludes our question-and-answer session for today's call. I would now like to turn the call back to Kevin Mandia, for any closing remarks.

[Kevin Mandia:]

Yes, thank you very much folks for your interest in our company. Our transformation is not defined by single ninety-day performance. I believe we are proving our transformation that we will continue on our path to provide our customers a single platform that implements Security-as-a-Service. Overlays our intelligence, decouples our detection in our IP from our spoke products over time, enables expertise on demand and powers security instrumentation. And I believe the organizational changes that we've made within FireEye. One prove our pace of innovation and deliver and execute. Thank you very much for your time and I look forward to speaking to in 90 days.

[Operator:]

Ladies and gentlemen, thank you for participating in today's conference. This concludes today’s program and you may all disconnect. Everyone have a wonderful day.