Fortinet Reports Strong First Quarter 2015 Financial Results
- Billings of $254.3 million, up 36% year over year1
- Revenues of $212.9 million, up 26% year over year
- Non-GAAP diluted net income per share of $0.081
- Cash flow from operations of $64.6 million
- Free cash flow of $59.7 million1
- Cash, cash equivalents and investments of $1.07 billion
- Deferred revenue of $600.2 million, up 33% year over year
Fortinet® (NASDAQ: FTNT), a global leader in high performance cyber security solutions, today announced financial results for the first quarter ended March 31, 2015.
“Fortinet had an exceptionally strong first quarter that reflects our ability to continue to execute in a strong security market and once again exceed our expectations across all key metrics,” said Ken Xie, founder, chairman and chief executive officer. “Our first quarter billings growth was the highest since becoming a public company over five years ago and is further evidence that our investment strategy is paying off. During the first quarter, we grew the number of large deals closed against competitors and added over 8,000 customers to our base of more than 200,000, which already include most of the Fortune Global 100. Looking forward, we feel Fortinet's scale is starting to provide more of a competitive differentiator on multiple fronts, and helps us provide the best solution to our customers. And Fortinet remains well positioned to maintain momentum and grow market share globally given our best-in-class integrated end-to-end network security platform, which provides superior protection against advanced cyber threats.”
Financial Highlights for the First Quarter of 2015
- Billings1: Total billings were $254.3 million for the first quarter of 2015, an increase of 36% compared to $187.6 million in the same quarter of 2014.
- Revenue: Total revenue was $212.9 million for the first quarter of 2015, an increase of 26% compared to $168.9 million in the same quarter of 2014. Within total revenue, product revenue was $97.5 million, an increase of 27% compared to the same quarter of 2014. Services and other revenue was $115.4 million, an increase of 25% compared to the same quarter of 2014.
- Deferred Revenue: Total deferred revenue was $600.2 million as of March 31, 2015, an increase of $41.4 million from $558.8 million as of December 31, 2014.
- Cash and Cash Flow2: As of March 31, 2015, cash, cash equivalents and investments were $1.07 billion, compared to $991.7 million as of December 31, 2014. In the first quarter of 2015, cash flow from operations was $64.6 million and free cash flow1 was $59.7 million.
- GAAP Operating Income: GAAP operating income was $0.9 million for the first quarter of 2015, representing a GAAP operating margin of 0.4%. GAAP operating income was $12.8 million for the same quarter of 2014, representing a GAAP operating margin of 8%.
- GAAP Net Income and Diluted Net Income Per Share: GAAP net income was $1.6 million for the first quarter of 2015, compared to GAAP net income of $8.4 million for the same quarter of 2014. GAAP diluted net income per share was $0.01 for the first quarter of 2015, compared to $0.05 for the same quarter of 2014.
- Non-GAAP Operating Income1: Non-GAAP operating income was $20.1 million for the first quarter of 2015, representing a non-GAAP operating margin of 9%. Non-GAAP operating income was $26.3 million for the same quarter of 2014, representing a non-GAAP operating margin of 16%.
- Non-GAAP Net Income and Diluted Net Income Per Share1: Non-GAAP net income was $13.5 million for the first quarter of 2015, compared to non-GAAP net income of $18.2 million for the same quarter of 2014. Non-GAAP diluted net income per share was $0.08 for the first quarter of 2015, compared to $0.11 for the same quarter of 2014.
1A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”
2During the first quarter of 2015, there were no shares repurchased under our share repurchase program.
Conference Call Details
Fortinet will host a conference call today, April 20, 2015, at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to discuss its financial results. To access this call, dial (877) 303-6913 (domestic) or (224) 357-2188 (international) with conference ID # 22278922. A live webcast of the conference call and supplemental slides will be accessible from the Investor Relations page of Fortinet's website at http://investor.fortinet.com and a replay will be archived and accessible at http://investor.fortinet.com/events.cfm. A replay of this conference call can also be accessed through April 27, 2015, by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) with conference ID# 22278922.
Following Fortinet's financial results conference call, the Company will host an additional question-and-answer session at 3:30 p.m. Pacific Time (6:30 p.m. Eastern Time) to provide an opportunity for financial analysts and investors to ask more detailed product and financial questions. To access this call, dial (877) 303-6913 (domestic) or (224) 357-2188 (international) with conference ID # 22281145. This follow-up call will be webcast live and accessible at http://investor.fortinet.com, and a replay will be archived and available after the call at http://investor.fortinet.com/events.cfm. A replay of this conference call will also be available through April 27, 2015 by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) with conference ID # 22281145.
This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding the momentum in our business, potential growth of our business, market share gains and product performance. Although we attempt to be accurate in making forward-looking statements, it is possible that future circumstances might differ from the assumptions on which such statements are based. Important factors that could cause results to differ materially from the statements herein include the following: general economic risks; increasing competitiveness in the security market; the dynamic nature of the security market; specific economic risks in different geographies, and among different customer segments; changes in foreign currency exchange rates; uncertainty regarding increased business and renewals from existing customers; uncertainties around continued success in sales growth and market share gains; failure to convert sales pipeline into final sales; risks associated with successful implementation of multiple integrated software products and other product functionality risks; execution risks around new product development and introductions and innovation; product defects; litigation and disputes and the potential cost, distraction and damage to sales and reputation caused thereby; market acceptance of new products and services; the ability to attract and retain personnel; changes in strategy; risks associated with management of growth; lengthy sales and implementation cycles, particularly in larger organizations; technological changes that make our products and services less competitive; risks associated with the adoption of, and demand for, our model in general and by specific customer segments; competition and pricing pressure; and the other risk factors set forth from time to time in our most recent Annual Report on Form 10-K, our most recent Quarterly Report on Form 10-Q and our other filings with the SEC, copies of which are available free of charge at the SEC's website at www.sec.gov or upon request from our investor relations department. All forward-looking statements herein reflect our opinions only as of the date of this release, and we undertake no obligation, and expressly disclaim any obligation, to update forward-looking statements herein in light of new information or future events.
Fortinet (NASDAQ: FTNT) protects the most valuable assets of some of the largest enterprise, service provider and government organizations across the globe. The company’s fast, secure and global cyber security solutions provide broad, high-performance protection against dynamic security threats while simplifying the IT infrastructure. They are strengthened by the industry’s highest level of threat research, intelligence and analytics. Unlike pure-play network security providers, Fortinet can solve organizations' most important security challenges, whether in a networked, application or mobile environments – be it virtualized/cloud or physical. More than 210,000 customers worldwide, including some of the largest and most complex organizations, trust Fortinet to protect their brands. Learn more at www.fortinet.com, or follow Fortinet at the Fortinet Blog, Google+, Linkedin or Twitter.
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