Fortinet Reports Strong Third Quarter 2015 Financial Results
- Revenue of $260.1 million, up 35% year over year
- Non-GAAP diluted net income per share of $0.141
- Cash flow from operations of $65.1 million
- Free cash flow of $51.7 million1
- Cash, cash equivalents and investments of $1.17 billion
- Deferred revenue of $706.9 million, up 41% year over year
SUNNYVALE, Calif. - October 22, 2015 - Fortinet® (NASDAQ: FTNT), a global leader in high performance cyber security solutions, today announced financial results for the third quarter ended September 30, 2015.
"For the third consecutive quarter this year, Fortinet accelerated billings growth to record levels, delivering 41% billings growth - the highest ever as a public company," said Ken Xie, founder, chairman and chief executive officer. "Additionally, we delivered non-GAAP operating margin and earnings per share upside to shareholders. We are executing well and our investment strategy is working. Fortinet remains well-positioned to gain market share globally due to our strong competitive technology position and best-in-class end-to-end network security solutions portfolio, as well as the ongoing success of our land and expand strategy."
Financial Highlights for the Third Quarter of 2015
- Billings1: Total billings were $299.6 million for the third quarter of 2015, an increase of 41% compared to $213.2 million in the same quarter of 2014.
- Revenue: Total revenue was $260.1 million for the third quarter of 2015, an increase of 35% compared to $193.3 million in the same quarter of 2014. Within total revenue, product revenue was $119.7 million, an increase of 36% compared to $87.7 million in the same quarter of 2014. Service revenue was $140.3 million, an increase of 33% compared to $105.6 million in the same quarter of 2014.
- Deferred Revenue: Total deferred revenue was $706.9 million as of September 30, 2015, an increase of $49.4 million compared to $657.6 million as of June 30, 2015.
- Cash and Cash Flow2: As of September 30, 2015, cash, cash equivalents and investments were $1.17 billion, compared to $1.15 billion as of June 30, 2015. In the third quarter of 2015, cash flow from operations was $65.1 million compared to $56.5 million in the same quarter of 2014. Free cash flow1 was $51.7 million during the third quarter of 2015 compared to $50.7 million in the same quarter of 2014.
- GAAP Operating Income or Loss: GAAP operating loss was $1.8 million for the third quarter of 2015, representing a GAAP operating margin of -0.7%. GAAP operating income was $15.5 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 $8.2 million for the third quarter of 2015, compared to GAAP net income of $4.1 million for the same quarter of 2014. GAAP diluted net income per share was $0.05 for the third quarter of 2015, compared to $0.02 for the same quarter of 2014.
- Non-GAAP Operating Income1: Non-GAAP operating income was $36.4 million for the third quarter of 2015, representing a non-GAAP operating margin of 14%. Non-GAAP operating income was $30.4 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 $24.1 million for the third quarter of 2015, compared to non-GAAP net income of $20.0 million for the same quarter of 2014. Non-GAAP diluted net income per share was $0.14 for the third quarter of 2015, compared to $0.12 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 third quarter of 2015, there were no shares repurchased under our share repurchase program.
Conference Call Details
Fortinet will host a conference call today, October 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 # 55728223. 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 October 29, 2015, by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) with conference ID# 55728223.
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 # 55732708. 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 October 29, 2015 by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) with conference ID # 55732708.
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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; risks associated with business acquisitions, including integration risks and assumption of unknown liabilities; technological changes that make our products and services less competitive; competition and pricing pressure; risks associated with increased international sales, including the impact of foreign currency exchange rates; 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 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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