Fortinet Reports First Quarter 2016 Financial Results

Fortinet’s Security Fabric Offerings and Strong Execution Drive Revenue Growth of 34% Year Over Year

  • Billings of $330.5 million, up 30% year over year1
  • Revenue of $284.6 million, up 34% year over year
  • Non-GAAP diluted net income per share of $0.121
  • Cash flow from operations of $100.6 million
  • Free cash flow of $70.6 million1
  • Cash, cash equivalents and investments of $1.19 billion
  • Deferred revenue of $837.2 million, up 39% year over year

SUNNYVALE, Calif. - April 26, 2016 - Fortinet® (NASDAQ: FTNT), a global leader in high performance cyber security solutions, today announced financial results for the first quarter ended March 31, 2016.

“During the first quarter, Fortinet executed very well and outperformed across all key metrics,” said Ken Xie, founder, chairman and chief executive officer. “The increasing complexity of the IT security landscape is driving customer adoption of broad, integrated platforms, which has been our vision from the company’s inception. Fortinet’s Security Fabric is a strategic asset, since it allows customers to protect and gain intelligence on all points in the network - from IoT to cloud - through a unified operating system and management platform.  This, along with recently announced products like our FortiGate-6000E Series of high-performance systems, strengthens our competitive position, expands our market opportunity, and helps to drive continued growth in 2016 and beyond.”

Financial Highlights for the First Quarter of 2016

  • Billings1: Total billings were $330.5 million for the first quarter of 2016, an increase of 30% compared to $254.3 million in the same quarter of 2015.
  • Revenue: Total revenue was $284.6 million for the first quarter of 2016, an increase of 34% compared to $212.9 million in the same quarter of 2015. Within total revenue, product revenue was $124.6 million, an increase of 28% compared to $97.5 million in the same quarter of 2015. Service revenue was $160.0 million, an increase of 39% compared to $115.4 million in the same quarter of 2015.
  • Deferred Revenue: Total deferred revenue was $837.2 million as of March 31, 2016, an increase of $45.9 million compared to $791.3 million as of December 31, 2015.
  • Cash and Cash Flow2: As of March 31, 2016, cash, cash equivalents and investments were $1.19 billion, compared to $1.16 billion as of December 31, 2015. In the first quarter of 2016, cash flow from operations was $100.6 million compared to $64.6 million in the same quarter of 2015. Free cash flow1 was $70.6 million during the first quarter of 2016 compared to $59.7 million in the same quarter of 2015.

GAAP Operating Income or Loss: GAAP operating loss was $5.7 million for the first quarter of 2016, representing a GAAP operating margin of -2%. GAAP operating income was $0.9 million for the same quarter of 2015, representing a GAAP operating margin of 0.4%

Non-GAAP Operating Income1: Non-GAAP operating income was $30.1 million for the first quarter of 2016, representing a non-GAAP operating margin of 11%. Non-GAAP operating income was $20.1 million for the same quarter of 2015, representing a non-GAAP operating margin of 9%

GAAP Net Income or Loss and Diluted Net Income or Loss Per Share: GAAP net loss was $3.4 million for the first quarter of 2016, compared to GAAP net income of $1.6 million for the same quarter of 2015. GAAP diluted net loss per share was $0.02 for the first quarter of 2016, compared to GAAP diluted net income per share of $0.01 for the same quarter of 2015.

 Non-GAAP Net Income and Diluted Net Income Per Share1: Non-GAAP net income was $20.1 million for the first quarter of 2016, compared to non-GAAP net income of $13.5 million for the same quarter of 2015.  Non-GAAP diluted net income per share was $0.12 for the first quarter of 2016, compared to $0.08 for the same quarter of 2015.

1 A 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.”

2 During the first quarter of 2016, we repurchased $50.0 million of our common stock under our share repurchase program. During the first quarter of 2015, there were no shares repurchased under our repurchase program.

Conference Call Details
Fortinet will host a conference call today, April 26, 2016, 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 # 82225827. 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 3, 2016, by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) with conference ID# 82225827.

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 # 82229345. 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 3, 2016 by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) with conference ID # 82229345.

Read the full press release (includes financial tables)

About Fortinet

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 networked, application or mobile environments - be it virtualized/cloud or physical. More than 270,000 customers worldwide, including some of the largest and most complex organizations, trust Fortinet to protect their brands. Learn more at www.fortinet.com, www.blog.fortinet.com, www.fortiguard.com

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