Fortinet Reports Excellent Second Quarter 2015 Financial Results

  • Billings of $297.2 million, up 40% year over year1
  • Revenue of $239.8 million, up 30% year over year
  • Non-GAAP diluted net income per share of $0.111
  • Cash flow from operations of $84.3 million
  • Free cash flow of $73.5 million1
  • Cash, cash equivalents and investments of $1.15 billion
  • Deferred revenue of $657.6 million, up 37% year over year

 

SUNNYVALE, Calif. - July 22, 2015 - Fortinet® (NASDAQ: FTNT), a global leader in high performance cyber security solutions, today announced financial results for the second quarter ended June 30, 2015.

“Fortinet’s record billings growth and better-than-expected revenue, profitability and cash flow during the second quarter reflect that our investment strategy continues to pay off,” said Ken Xie, founder, chairman and chief executive officer. “Our over-performance was driven by the combination of our customer focus and strong competitive technology position, return on our sales and marketing investments, momentum with our partners, the robust security market, and our ability to land new customers as well as expand within our existing accounts. Looking forward, Fortinet is well positioned to maintain momentum and gain market share globally due to our best-in-class integrated end-to-end network security platform.”

Financial Highlights for the Second Quarter of 2015

  • Billings1: Total billings were $297.2 million for the second quarter of 2015, an increase of 40% compared to $213.0 million in the same quarter of 2014.

  • Revenue: Total revenue was $239.8 million for the second quarter of 2015, an increase of 30% compared to $184.1 million in the same quarter of 2014. Within total revenue, product revenue was $114.8 million, an increase of 34% compared to $85.4 million in the same quarter of 2014. Service revenue was $125.0 million, an increase of 27% compared to $98.7 million in the same quarter of 2014.

  • Deferred Revenue: Total deferred revenue was $657.6 million as of June 30, 2015, an increase of $57.4 million from $600.2 million as of March 31, 2015.

  • Cash and Cash Flow2: As of June 30, 2015, cash, cash equivalents and investments were $1.15 billion, compared to $1.07 billion as of March 31, 2015. In the second quarter of 2015, cash flow from operations was $84.3 million compared to $43.8 million in the same quarter of 2014. Free cash flow1 was $73.5 million during the second quarter of 2015 compared to $34.1 million in the same quarter of 2014.

  • GAAP Operating Income: GAAP operating income was $3.0 million for the second quarter of 2015, representing a GAAP operating margin of 1%. GAAP operating income was $11.1 million for the same quarter of 2014, representing a GAAP operating margin of 6%.

  • GAAP Net Income and Diluted Net Income Per Share: GAAP net income was $0.8 million for the second quarter of 2015, compared to GAAP net income of $6.1 million for the same quarter of 2014. GAAP diluted net income per share was break-even for the second quarter of 2015, compared to $0.04 for the same quarter of 2014.

  • Non-GAAP Operating Income1: Non-GAAP operating income was $29.3 million for the second quarter of 2015, representing a non-GAAP operating margin of 12%. Non-GAAP operating income was $28.7 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 $19.4 million for the second quarter of 2015, compared to non-GAAP net income of $18.6 million for the same quarter of 2014. Non-GAAP diluted net income per share was $0.11 for both periods.

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 second quarter of 2015, there were no shares repurchased under our share repurchase program.

 

Read the full press release (includes financial tables)

 

Conference Call Details

Fortinet will host a conference call today, July 22, 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 # 80645551. 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 July 29, 2015, by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) with conference ID# 80645551.

Following the financial results conference call, Fortinet 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 # 80648574. 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 July 29, 2015 by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) with conference ID # 80648574.

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Forward-looking Statements

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 and market share gains. 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; sales execution risks; product defects; security breaches; 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; 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.

 

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 200,000 customers worldwide, including some of the largest and most complex organizations, trust Fortinet to protect their brands. Learn more at www.fortinet.com, the Fortinet Blog or FortiGuard Labs.

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