FireEye stock is down 19 percent this morning, at $12.95, as revenues are being hit by the security industry's shift to software.

Specifically, subscription-based pricing is on the rise, taking the place of traditional security appliances, FireEye officials said during the company's first-quarter earnings call yesterday.

The company also announced it's changing CEOs as of June 15. CEO and chairman Dave DeWalt will become executive chairman, while Kevin Mandia will become CEO.

Mandia, already FireEye's president, was CEO of Mandiant, which FireEye acquired in 2014.

CFO Mike Berry will also become the company's COO.

FireEye didn't give specific reasons for the change. On yesterday's earnings call, one analyst asked if it was the result of DeWalt trying — and failing — to sell the company. DeWalt ignored the question and instead talked about a longstanding goal to "assemble the strongest team in the industry."

The timing makes sense because June 15 is the day after FireEye's shareholder meeting. The best times for this transition would have been that day or the end of the year, DeWalt said on the call.

Mandia is a well known figure in security, having helmed Mandiant for nine years. So the executive musical chairs, while surprising, probably isn't the reason for the stock dropping so steeply.

It's more that the shift to subscriber-based revenues means less money for FireEye in the short term. Revenues for the full year will fall $35 million short of expectations — about 4 percent — as revenues from traditional products drop 10 to 12 percent compared to last year, CFO Berry said.

Subscription-based revenues, by contrast, will climb 25 to 30 percent for the year, he said.

The company has also begun layoffs of roughly 200, to be completed this quarter. The company employed 3,100 as of Dec. 31, according to its SEC filings.

FireEye saw this transition coming, but not so quickly. It hit an "inflection point" last quarter "as the company saw rapid acceleration in this mix change, especially in the last month of the quarter," wrote Dougherty & Co. analyst Catherine Trebnick in a research note this morning.

Still, FireEye was already "consciously" moving its product strategy away from appliances, DeWalt said on the call. "We built almost every form factor that we have developed from beginning now in virtual and cloud form factors in subscriptions and as-a-service."

The numbers do back DeWalt's claim. Subscription revenues in the first quarter were up 71 percent from a year ago, at $74.2 million.

Some of that was due to acquisitions — startups that already sold subscriptions, rather than hardware. But even if you remove that "inorganic" growth, FireEye's subscription revenue grew 50 percent year-over-year," a promising sign for the future," Trebnick wrote.

For the first quarter, FireEye reported revenues of $168 million, compared with $125 million a year ago. That's at the low end of the $167 million to $177 million FireEye had predicted — hence, investors' disappointment.

FireEye reported first-quarter losses of $156 million, or 98 cents per share, compared with year-ago losses of $133 million, or 88 cents per share.

Non-GAAP losses for the quarter were 47 cents per share, better than the 50 cents predicted by analysts, according to Thomson Financial.