Fortinet Reports First Quarter 2017 Financial Results

Company Reports Revenue Growth of 20% and Billings Growth of 22%

SUNNYVALE, Calif. - Apr 27, 2017


First Quarter 2017 Highlights

  • Revenue of $340.6 million, up 20% year over year
  • Billings of $403.3 million, up 22% year over year1
  • GAAP diluted net income per share of $0.06
  • Non-GAAP diluted net income per share of $0.171, up 42% year over year
  • Cash flow from operations of $129.7 million
  • Free cash flow of $116.2 million1, up 65% year over year
  • Cash, cash equivalents and investments of $1.44 billion
  • Deferred revenue of $1.10 billion, up 31% year over year

SUNNYVALE, Calif. April 27, 2017—Fortinet® (NASDAQ: FTNT), a global leader in high performance cyber security solutions, today announced financial results for the first quarter ended March 31, 2017.

“In the first quarter, Fortinet delivered billings and revenue growth that exceeded our guidance and continued to outgrow the market,” said Ken Xie, founder, chairman and chief executive officer. “The Fortinet Security Fabric is gaining significant traction with customers as demonstrated by the strength in large, multi-product deals and our continued expansion into the largest enterprises around the world.”

  • Revenue: Total revenue was $340.6 million for the first quarter of 2017, an increase of 20% compared to $284.6 million in the same quarter of 2016. Within total revenue, product revenue was $135.3 million, an increase of 9% compared to $124.6 million in the same quarter of 2016. Service revenue was $205.3 million, an increase of 28% compared to $160.0 million in the same quarter of 2016.
  • Billings1: Total billings were $403.3 million for the first quarter of 2017, an increase of 22% compared to $330.5 million in the same quarter of 2016.
  • Deferred Revenue: Total deferred revenue was $1.10 billion as of March 31, 2017, an increase of 31% compared to $837.2 million as of March 31, 2016. Total deferred revenue increased by $62.7 million compared to $1.04 billion as of December 31, 2016.
  • Cash and Cash Flow: As of March 31, 2017, cash, cash equivalents and investments were $1.44 billion, compared to $1.31 billion as of December 31, 2016. In the first quarter of 2017, cash flow from operations was $129.7 million compared to $100.6 million in the same quarter of 2016. Free cash flow1 was $116.2 million during the first quarter of 2017 compared to $70.6 million in the same quarter of 2016, an increase of 65%.
  • GAAP Operating Income or Loss: GAAP operating income was $5.4 million for the first quarter of 2017, representing a GAAP operating margin of 2%. GAAP operating loss was $3.7 million for the same quarter of 2016, representing a GAAP operating margin of -1%. 
  • Non-GAAP Operating Income1: Non-GAAP operating income was $43.0 million for the first quarter of 2017, representing a non-GAAP operating margin of 13%. Non-GAAP operating income was $30.1 million for the same quarter of 2016, representing a non-GAAP operating margin of 11%. 
  • GAAP Net Income and Diluted Net Income Per Share: GAAP net income was $10.7 million for the first quarter of 2017, compared to GAAP net income of $2.1 million for the same quarter of 2016. GAAP diluted net income per share was $0.06 for the first quarter of 2017, compared to $0.01 for the same quarter of 2016.
  • Non-GAAP Net Income and Diluted Net Income Per Share1: Non-GAAP net income was $31.0 million for the first quarter of 2017, compared to non-GAAP net income of $20.1 million for the same quarter of 2016.  Non-GAAP diluted net income per share was $0.17 for the first quarter of 2017, compared to $0.12 for the same quarter of 2016.

1 A reconciliation of GAAP to non-GAAP 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.”

Conference Call Details

Fortinet will host a conference call today, April 27, 2017, 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 # 93617593. 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 May 4, 2017, by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) with conference ID# 93617593.

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 questions. To access this call, dial (877) 303-6913 (domestic) or (224) 357-2188 (international) with conference ID # 93622812. 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 May 4, 2017 by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) with conference ID # 93622812.

Read the full press release (includes financial tables)

About Fortinet

Fortinet (NASDAQ: FTNT) secures the largest enterprise, service provider, and government organizations around the world. Fortinet empowers its customers with intelligent, seamless protection across the expanding attack surface and the power to take on ever-increasing performance requirements of the borderless network - today and into the future. Only the Fortinet Security Fabric architecture can deliver security without compromise to address the most critical security challenges, whether in networked, application, cloud, or mobile environments. Fortinet ranks #1 in the most security appliances shipped worldwide and more than 300,000 customers trust Fortinet to protect their businesses. Learn more at https://www.fortinet.com, the Fortinet Blog, or FortiGuard Labs.

Copyright © 2017 Fortinet, Inc. All rights reserved. The symbols ® and ™ denote respectively federally registered trademarks and unregistered trademarks of Fortinet, Inc., its subsidiaries and affiliates. Fortinet's trademarks include, but are not limited to, the following: Fortinet, FortiGate, FortiGuard, FortiManager, FortiMail, FortiClient, FortiCloud, FortiCare, FortiAnalyzer, FortiReporter, FortiOS, FortiASIC, FortiWiFi, FortiSwitch, FortiVoIP, FortiBIOS, FortiLog, FortiResponse, FortiCarrier, FortiScan, FortiAP, FortiDB, FortiVoice and FortiWeb. Other trademarks belong to their respective owners. Fortinet has not independently verified statements or certifications herein attributed to third parties and Fortinet does not independently endorse such statements. Notwithstanding anything to the contrary herein, nothing herein constitutes a warranty, guarantee, binding specification or other binding commitment by Fortinet, and performance and other specification information herein may be unique to certain environments. This news release contains forward-looking statements that involve uncertainties and assumptions, such as statements regarding technology releases. Changes of circumstances, product release delays, or other risks as stated in our filings with the Securities and Exchange Commission, located at www.sec.gov, may cause results to differ materially from those expressed or implied in this press release. If the uncertainties materialize or the assumptions prove incorrect, results may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Fortinet assumes no obligation to update any forward-looking statements, and expressly disclaims any obligation to update these forward-looking statements.