Fortinet Reports Strong Second Quarter 2014 Financial Results: Billings Grow 33% and Revenues Grow 25% Year-Over-Year
- Billings of $213.0 million, up 33% year over year1
- Revenues of $184.1 million, up 25% year over year
- Non-GAAP diluted net income per share of $0.111
- Cash, cash equivalents and investments of $910.6 million2, with no debt
- Deferred revenue of $480.2 million, up 23% year over year
SUNNYVALE, Calif. - July 23, 2014 - Fortinet® (NASDAQ: FTNT), a global leader in high-performance network security, today announced financial results for the second quarter ended June 30, 2014.
“Our strong second quarter results highlight that our growth strategy is working and our sales and marketing investments are paying off, especially in the high-end enterprise where we saw significant traction with large deals over $500,000 growing 95 percent year over year" said Ken Xie, founder, chairman and chief executive officer. “Our ability to exceed expectations across all operating metrics during Q2 was driven by the combination of superior sales execution, improved marketing, and strong demand for new high-performance enterprise products. With continued focused execution and an exciting portfolio of new products that further strengthen our competitive advantage, we believe Fortinet remains well-positioned for growth and market share gains.”
Financial Highlights for the Second Quarter of 2014
• Billings1: Total billings were $213.0 million for the second quarter of 2014, an increase of 33% compared to $160.7 million in the same quarter of 2013.
• Revenue3: Total revenue was $184.1 million for the second quarter of 2014, an increase of 25% compared to $147.4 million in the same quarter of 2013. Within total revenue, product revenue was $85.4 million, an increase of 28% compared to the same quarter of 2013. Services and other revenue was $98.7 million, an increase of 22% compared to the same quarter of 2013.
• Deferred Revenue: Total deferred revenue was $480.2 million as of June 30, 2014, an increase of 23% compared to deferred revenue of $389.7 million as of June 30, 2013, and an increase of $28.9 million from $451.3 million as of March 31, 2014.
• Cash and Cash Flow2: As of June 30, 2014, cash, cash equivalents and investments were $910.6 million, compared to $888.3 million as of March 31, 2014. In the second quarter of 2014, cash flow from operations was $43.8 million and free cash flow1 was $34.1 million.
• GAAP Operating Income: GAAP operating income was $11.1 million for the second quarter of 2014, representing a GAAP operating margin of 6%. GAAP operating income was $13.8 million for the same quarter of 2013, representing a GAAP operating margin of 9.0%.
• GAAP Net Income and Diluted Net Income Per Share: GAAP net income was $6.1 million for the second quarter of 2014, compared to GAAP net income of $9.0 million for the same quarter of 2013. GAAP diluted net income per share was $0.04 for the second quarter of 2014, compared to $0.05 for the same quarter of 2013.
• Non-GAAP Operating Income1: Non-GAAP operating income was $28.7 million for the second quarter of 2014, representing a non-GAAP operating margin of 16%. Non-GAAP operating income was $24.8 million for the same quarter of 2013, representing a non-GAAP operating margin of 17%.
• Non-GAAP Net Income and Diluted Net Income Per Share1: Non-GAAP net income was $18.6 million for the second quarter of 2014, compared to non-GAAP net income of $17.5 million for the same quarter of 2013. Non-GAAP diluted net income per share was $0.11 for the second quarter of 2014 , compared to $0.10 for the same quarter of 2013.
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 second quarter of fiscal 2014, we repurchased $14.9 million of our common stock under our share repurchase program.
3 Beginning in the first quarter of 2014, we combined ratable and other revenue with services revenue to present the combined amounts as services and other revenue in the condensed consolidated statements of operations. The related cost of revenue and gross profit, including prior period amounts, have also been combined to conform to the current period presentation. We believe the ratable and other revenue amounts, including the related cost of revenue and gross profit amounts, are not material.
Conference Call Details
Fortinet will host a conference call today, July 23, 2014, 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 # 72208196. 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 30, 2014, by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) with conference ID# 72208196.
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 # 72216231. 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 30, 2014 by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) with conference ID # 72216231.
Fortinet (NASDAQ: FTNT) is a worldwide provider of network security appliances and a market leader in unified threat management (UTM). Our products and services provide broad, integrated and high-performance protection against dynamic security threats while simplifying the IT security infrastructure. Our customers include enterprises, service providers and government entities worldwide, including the majority of the 2013 Fortune Global 100. Fortinet's flagship FortiGate product delivers ASIC-accelerated performance and integrates multiple layers of security designed to help protect against application and network threats. Fortinet's broad product line goes beyond UTM to help secure the extended enterprise -- from endpoints, to the perimeter and the core, including databases and applications. Fortinet is headquartered in Sunnyvale, Calif., with offices around the world.
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