FireEye's Innovation Engine Just Got Better

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With security breaches in the news, company boards and customers are demanding that companies have a plan for protecting customer and proprietary data. Kevin Mandia, CEO of FireEye (NASDAQ: FEYE), has been responding to security breaches his entire career and says he has used insights from the "frontlines on the cyberbattlefield" to build an innovative development process, and the company recently made a key acquisition to make that process even better.

FireEye's innovation process

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FireEye uses its consulting arm, Mandiant Services, as an integral part of its product development in two key ways. First, it uses the real-world experiences to inform its development process. In 2017, Mandiant incident investigators performed over 300 investigations in more than 20 countries, logging in excess of 200,000 hours fighting cyberattacks in real time. Mandia said during the company's early February conference call with analysts that "because of our position on the frontlines, we also learned which products are being evaded and how, and what capabilities are needed to detect and stop these attacks." He added that this knowledge feeds the company's innovation cycle and allows the company to "adapt sooner and innovate faster, keeping our products relevant and our customers protected."

Second, Mandiant Services helps the product development cycle by testing products in real-world situations before releasing them to customers. This hardcore approach to testing products enables the company to have some pretty amazing results when it comes to protecting customers.

Finding the needle

Most of the time spent in cybersecurity is sorting through alerts generated by unusual behavior in the network and trying to determine if they are important. FireEye's platform is able to sort through the noise and focus on the things that matter with a high degree of accuracy. Mandia explained how powerful the company's algorithms and machine learning capabilities are in the most recent earnings call:

Mandia has called this "finding the needle in the haystack." FireEye's products are known for a high rate of accuracy, which makes the security analysts who use the software much more effective in their primary job of protecting their company's network. While this example is pretty impressive, FireEye is constantly pushing the envelope to improve its products. A recent purchase of a small private company plays into this strategy.

X15 Software joins FireEye

In January, the company announced it had purchased X15 Software for $15 million in equity and $5 million in cash. FireEye's press release explains that the company's technology "solves the complex problem of collecting, querying, and analyzing large volumes of machine-generated data in real time." Mandia indicated that "the X15 platform allows us to extend Helix [the company's flagship product] to on-premise deployments and to a more diverse range of cloud platforms, such as AWS, Microsoft, Oracle, and others."

This company is a great fit for FireEye because of its ability to collect and make sense of large amounts of machine-generated data from multiple platforms in order to help find the needle in the haystack. John Laliberte, FireEye's senior vice president of engineering, said that "X15 Software technology will accelerate our strategy of delivering an innovative, next-gen security platform." In a recent meeting with analysts, Mandia explained that X15 Software is better with big data than the company's current solution, and its capabilities will be integrated into the "foundation" of Helix, making it even better for FireEye's customers.

FireEye understands that cybercriminals are only getting better, and it is taking smart steps to keep pace with the ever-growing threat. The $20 million in cash and equity the company used to buy X15 Software is only a small portion of the company's reported $897 million in cash and cash equivalents and is an improvement to its flagship product and its innovation engine.

I continue to be impressed with the moves by Mandia and the company to make its products better and strengthen its value proposition for its customers.

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Brian Withers owns shares of FireEye. The Motley Fool recommends FireEye. The Motley Fool has a disclosure policy.