Fortinet Reports Fourth Quarter and Full Year 2023 Financial
Results
Fourth Quarter 2023 Highlights
- Total revenue of $1.42 billion, up 10.3% year over
year
- Billings of $1.86 billion, up 8.5% year over
year1
- GAAP operating income of $385 million
- Non-GAAP operating income of $454
million1
- GAAP operating margin of 27.2%
- Non-GAAP operating margin of
32.0%1
- Cash paid for share repurchases of
$896 million
Full Year 2023 Highlights
- Total revenue of $5.30 billion, up 20% year over
year
- Service revenue of $3.38 billion, up 28% year over
year
- Billings of $6.40 billion, up 14% year over
year1
- Deferred revenue of $5.74 billion, up 24% year over
year
- GAAP operating income of $1.24 billion, up 28% year over
year
- Non-GAAP operating income of $1.51 billion, up 25% year
over year1
- GAAP operating margin of 23.4%
- Non-GAAP operating margin of
28.4%1
- GAAP diluted net income per share attributable to Fortinet,
Inc. of $1.46, up 38% year over year
- Non-GAAP diluted net income per share attributable to
Fortinet, Inc. of $1.63, up 37% year over
year1
- Cash flow from operations of $1.94 billion
- Free cash flow of $1.73
billion1
- Cash paid for share repurchases of $1.50
billion
SUNNYVALE, Calif., Feb. 06, 2024 (GLOBE NEWSWIRE) -- Fortinet®
(Nasdaq: FTNT), a global cybersecurity leader driving the
convergence of networking and security, today announced financial
results for the fourth quarter of 2023 and full year ended
December 31, 2023.
“In the fourth quarter of 2023, Security Operations billings
grew 44% year over year and SASE billings increased 19% year over
year, driven by our successful sales strategy shift and the
improved execution of our sales teams,” said Ken Xie, Founder,
Chairman and Chief Executive Officer of Fortinet. “Our platform
strategy is resonating with enterprises worldwide as we are a
leader in Secure Networking and are the #1 firewall vendor for
units shipped with FortiGates accounting for over half of the
global deployment. Fortinet is well-positioned to consolidate the
security capabilities of our over half a million customers onto our
integrated FortiOS operating system, which encompasses over 30
networking and security functions spanning on-premises and cloud
environments.”
Financial Highlights for the Fourth Quarter of
2023
- Revenue: Total revenue was $1.42 billion for
the fourth quarter of 2023, an increase of 10.3% compared to $1.28
billion for the same quarter of 2022.
- Service Revenue: Service revenue was $927.0
million for the fourth quarter of 2023, an increase of 24.8%
compared to $742.9 million for the same quarter of 2022.
- Product Revenue: Product revenue was $488.1
million for the fourth quarter of 2023, a decrease of 9.6% compared
to $540.1 million for the same quarter of 2022.
-
Billings1:
Total billings were $1.86 billion for the fourth quarter of 2023,
an increase of 8.5% compared to $1.72 billion for the same quarter
of 2022.
- GAAP Operating Income and Margin: GAAP
operating income was $385.4 million for the fourth quarter of 2023,
representing a GAAP operating margin of 27.2%. GAAP operating
income was $357.8 million for the same quarter of 2022,
representing a GAAP operating margin of 27.9%.
- Non-GAAP Operating Income
and
Margin1:
Non-GAAP operating income was $453.5 million for the fourth quarter
of 2023, representing a non-GAAP operating margin of 32.0%.
Non-GAAP operating income was $417.6 million for the same quarter
of 2022, representing a non-GAAP operating margin of
32.5%.
- GAAP Net Income and Diluted Net Income Per Share
Attributable to Fortinet, Inc.: GAAP net income was $310.9
million for the fourth quarter of 2023, compared to GAAP net income
of $313.8 million for the same quarter of 2022. GAAP diluted net
income per share was $0.40 for the fourth quarter of 2023, based on
772.3 million diluted weighted-average shares outstanding,
compared to GAAP diluted net income per share of $0.40 for the same
quarter of 2022, based on 791.8 million diluted
weighted-average shares outstanding.
- Non-GAAP Net Income and Diluted Net
Income Per Share Attributable to Fortinet,
Inc.1:
Non-GAAP net income was $392.0 million for the fourth quarter of
2023, compared to non-GAAP net income of $349.7 million for the
same quarter of 2022. Non-GAAP diluted net income per share was
$0.51 for the fourth quarter of 2023, based on 772.3 million
diluted weighted-average shares outstanding, compared to $0.44 for
the same quarter of 2022, based on 791.8 million diluted
weighted-average shares outstanding.
- Cash Flow: Cash flow from operations was
$191.7 million for the fourth quarter of 2023, compared to $528.1
million for the same quarter of 2022.
- Free Cash
Flow1: Free
cash flow was $164.8 million for the fourth quarter of 2023,
compared to $497.2 million for the same quarter of 2022.
- Share Repurchase Program: During the three
months ended December 31, 2023, Fortinet repurchased
16.8 million shares of its common stock at an average price of
$53.29 per share and for an aggregate purchase price of
$895.3 million. In January 2024, Fortinet’s board of directors
authorized a $500.0 million increase in the authorized share
repurchase amount under our share repurchase program. As of
February 6, 2024, approximately $1.03 billion remained
available for future share repurchases under our share repurchase
program.
Financial Highlights for the Full Year 2023
- Revenue: Total revenue was $5.30 billion for
2023, an increase of 20.1% compared to $4.42 billion in
2022.
- Service Revenue: Service revenue was $3.38
billion for 2023, an increase of 28.1% compared to $2.64 billion in
2022.
- Product Revenue: Product revenue was $1.93
billion for 2023, an increase of 8.2% compared to $1.78 billion in
2022.
-
Billings1:
Total billings were $6.40 billion for 2023, an increase of 14.4%
compared to $5.59 billion in 2022.
- Deferred Revenue: Total deferred revenue was
$5.74 billion as of December 31, 2023, an increase of 23.6%
compared to $4.64 billion as of December 31, 2022.
- GAAP Operating Income and Margin: GAAP
operating income was $1.24 billion for 2023, representing a GAAP
operating margin of 23.4%. GAAP operating income was $969.6 million
for 2022, representing a GAAP operating margin of 21.9%.
- Non-GAAP Operating Income
and
Margin1:
Non-GAAP operating income was $1.51 billion for 2023, representing
a non-GAAP operating margin of 28.4%. Non-GAAP operating income was
$1.21 billion for 2022, representing a non-GAAP operating margin of
27.3%.
- GAAP Net Income and Diluted Net Income Per Share
Attributable to Fortinet, Inc.: GAAP net income was $1.15
billion for 2023, compared to GAAP net income of $857.3 million for
2022. GAAP diluted net income per share was $1.46 for 2023, based
on 788.2 million diluted weighted-average shares outstanding,
compared to GAAP diluted net income per share of $1.06 for 2022,
based on 805.3 million diluted weighted-average shares
outstanding.
- Non-GAAP Net Income and Diluted Net
Income Per Share Attributable to Fortinet,
Inc.1:
Non-GAAP net income was $1.29 billion for 2023, compared to
non-GAAP net income of $961.6 million for 2022. Non-GAAP diluted
net income per share was $1.63 for 2023, based on
788.2 million diluted weighted-average shares outstanding,
compared to $1.19 for 2022, based on 805.3 million diluted
weighted-average shares outstanding.
- Cash Flow: Cash flow from operations was $1.94
billion in 2023 compared to $1.73 billion in 2022.
- Free Cash
Flow1: Free
cash flow was $1.73 billion in 2023, compared to $1.45 billion in
2022.
- Share Repurchase Program: During the years
ended December 31, 2023 and 2022, Fortinet repurchased 27.2 million
and 36.0 million shares of its common stock at an average
price of $55.25 and $55.37 per share, respectively, and for an
aggregate purchase price of $1.50 billion and $1.99 billion,
respectively. Since the beginning of 2020, Fortinet repurchased
134.6 million shares of its common stock at an average price
of $39.47 per share for an aggregate purchase price of
$5.31 billion.
Guidance
For the first quarter of 2024, Fortinet currently expects:
- Revenue in the range of $1.300 billion to $1.360 billion
- Billings in the range of $1.390 billion to $1.450 billion
- Non-GAAP gross margin in the range of 76.5% to 77.5%
- Non-GAAP operating margin in the range of 25.5% to 26.5%
- Diluted non-GAAP net income per share attributable to Fortinet,
Inc. in the range of $0.37 to $0.39, assuming a non-GAAP effective
tax rate of 17%. This assumes a diluted share count of 775 million
to 785 million.
For the fiscal year 2024, Fortinet currently expects:
- Revenue in the range of $5.715 billion to $5.815 billion
- Service revenue in the range of $3.920 billion to $3.970
billion
- Billings in the range of $6.400 billion to $6.600 billion
- Non-GAAP gross margin in the range of 76.0% to 78.0%
- Non-GAAP operating margin in the range of 25.5% to 27.5%
- Diluted non-GAAP net income per share attributable to Fortinet,
Inc. in the range of $1.65 to $1.70, assuming a non-GAAP effective
tax rate of 17%. This assumes a diluted share count of 785 million
to 795 million.
These statements are forward looking and actual results may
differ materially. Refer to the Forward-Looking Statements section
below for information on the factors that could cause our actual
results to differ materially from these forward-looking
statements.
Our guidance with respect to non-GAAP financial measures
excludes stock-based compensation, amortization of acquired
intangible assets and gain on intellectual property matters. We
have not reconciled our guidance with respect to non-GAAP financial
measures to the corresponding GAAP measures because certain items
that impact these measures are uncertain or out of our control, or
cannot be reasonably predicted. Accordingly, a reconciliation of
these non-GAAP financial measures to the corresponding GAAP
measures is not available without unreasonable effort.
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 at 1:30 p.m. Pacific
Time (4:30 p.m. Eastern Time) to discuss the earnings results. A
live webcast of the conference call and supplemental slides will be
accessible from the Investor Relations page of Fortinet’s website
at https://investor.fortinet.com and a replay will be archived
and accessible at
https://investor.fortinet.com/events-and-presentations.
First Quarter 2024 Conference Participation
Schedule:
- Morgan Stanley Technology, Media & Telecom
Conference
March 5, 2024
Members of Fortinet’s management team are expected to present at
this conference and discuss the latest company strategies and
initiatives. Fortinet’s conference presentations are expected to be
available via webcast on the company’s web site. To access the most
updated information, pre-register and listen to the webcast of each
event, please visit the Investor Presentation & Events page of
Fortinet’s website at
https://investor.fortinet.com/events-and-presentations. The
schedule is subject to change.
About Fortinet (www.fortinet.com)
Fortinet (Nasdaq: FTNT) is a driving force in the evolution of
cybersecurity and the convergence of networking and security. Our
mission is to secure people, devices and data everywhere, and today
we deliver cybersecurity everywhere our customers need it with the
largest integrated portfolio of over 50 enterprise-grade products.
Over half a million customers trust Fortinet’s solutions, which are
among the most deployed, most patented and most validated in the
industry. The Fortinet Training Institute, one of the largest
and broadest training programs in the industry, is dedicated to
making cybersecurity training and new career opportunities
available to everyone. FortiGuard Labs, Fortinet’s elite threat
intelligence and research organization, develops and utilizes
leading-edge machine learning and AI technologies to provide
customers with timely and consistently top-rated protection and
actionable threat intelligence. Learn more at
https://www.fortinet.com, the Fortinet Blog or FortiGuard
Labs.
Copyright © 2024 Fortinet, Inc. All rights
reserved. The symbols ® and ™ denote respectively federally
registered trademarks and common law trademarks of Fortinet, Inc.,
its subsidiaries and affiliates. Fortinet’s trademarks include, but
are not limited to, the following: Fortinet, the Fortinet logo,
FortiGate, FortiOS, FortiGuard, FortiCare, FortiAnalyzer,
FortiManager, FortiASIC, FortiClient, FortiCloud, FortiMail,
FortiSandbox, FortiADC, FortiAIOps, FortiAntenna, FortiAP,
FortiAPCam, FortiAuthenticator, FortiCache, FortiCam, FortiCamera,
FortiCarrier, FortiCASB, FortiCentral, FortiCNP, FortiConnect,
FortiController, FortiConverter, FortiCWP, FortiDAST, FortiDB,
FortiDDoS, FortiDeceptor, FortiDeploy, FortiDevSec, FortiEDR,
FortiExplorer, FortiExtender, FortiFirewall, FortiFlex, FortiFone,
FortiGSLB, FortiGuest, FortiHypervisor, FortiInsight,
FortiIsolator, FortiLAN, FortiLink, FortiMonitor, FortiNAC,
FortiNDR, FortiPAM, FortiPenTest, FortiPhish, FortiPoint,
FortiPolicy, FortiPortal, FortiPresence, FortiProxy, FortiRecon,
FortiRecorder, FortiSASE, FortiSDNConnector, FortiSIEM, FortiSMS,
FortiSOAR, FortiSRA, FortiStack, FortiSwitch, FortiTester,
FortiToken, FortiTrust, FortiVoice, FortiWAN, FortiWeb, FortiWiFi,
FortiWLC, FortiWLM and FortiXDR. 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, contract, binding specification
or other binding commitment by Fortinet or any indication of intent
related to a binding commitment, and performance and other
specification information herein may be unique to certain
environments.
FTNT-F
Forward-Looking Statements
This press release contains forward-looking statements that
involve risks and uncertainties. These forward-looking statements
include statements regarding any indications related to future
growth and market share gains, our strategy going forward, and
guidance and expectations around future financial results,
including guidance and expectations for the first quarter of 2024
and full year 2024, and any statements regarding our market
opportunity and market size, and business momentum. 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 such that actual
results are materially different from our forward-looking
statements in this release. Important factors that could cause
results to differ materially from the statements herein include the
following: general economic risks, including those caused by
economic challenges, a possible economic downturn or recession and
the effects of inflation or stagflation, rising interest rates or
reduced information technology spending; instability in the global
banking system; supply chain challenges; negative impacts from the
ongoing war in Ukraine and its related macroeconomic effects and
our decision to reduce operations in Russia, as well as the
Israel-Hamas war; competitiveness in the security market; the
dynamic nature of the security market and its products and
services; specific economic risks worldwide and in different
geographies, and among different customer segments; uncertainty
regarding demand and increased business and renewals from existing
customers; uncertainties around continued success in sales growth
and market share gains; uncertainties in market opportunities and
the market size; actual or perceived vulnerabilities in our supply
chain, products or services, and any actual or perceived breach of
our network or our customers’ networks; longer sales cycles,
particularly for larger enterprise, service providers, government
and other large organization customers; the effectiveness of our
salesforce and failure to convert sales pipeline into final sales;
risks associated with successful implementation of multiple
integrated software products and other product functionality risks;
risks associated with integrating acquisitions and changes in
circumstances and plans associated therewith, including, among
other risks, changes in plans related to product and services
integrations, product and services plans and sales strategies;
sales and marketing execution risks; execution risks around new
product development and introductions and innovation; litigation
and disputes and the potential cost, distraction and damage to
sales and reputation caused thereby or by other factors;
cybersecurity threats, breaches and other disruptions; 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; risks associated
with the adoption of, and demand for, our products and services in
general and by specific customer segments, including those caused
by competition and pricing pressure; excess product inventory for
any reason, including those caused by the effects of increased
inflation and interest rates in certain geographies and the war in
Ukraine and the Israel-Hamas war; risks associated with business
disruption caused by natural disasters and health emergencies such
as earthquakes, fires, power outages, typhoons, floods, health
epidemics and viruses, and by manmade events such as civil unrest,
labor disruption, international trade disputes, international
conflicts such as the war in Ukraine and the Israel-Hamas war or
tensions between China and Taiwan, terrorism, wars, and critical
infrastructure attacks; tariffs, trade disputes and other trade
barriers, and negative impact on sales based on geo-political
dynamics and disputes and protectionist policies; any political and
government disruption around the world, including the impact of any
future shutdowns of the U.S. government; 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 Securities and Exchange Commission (“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.
Non-GAAP Financial Measures
We have provided in this release financial information that has
not been prepared in accordance with U.S. Generally Accepted
Accounting Principles (GAAP). These non-GAAP financial and
liquidity measures are not based on any standardized methodology
prescribed by GAAP and are not necessarily comparable to similar
measures presented by other companies. We use these non-GAAP
financial measures internally in analyzing our financial results
and believe they are useful to investors, as a supplement to GAAP
measures, in evaluating our ongoing operational performance. We
believe that the use of these non-GAAP financial measures provides
an additional tool for investors to use in evaluating ongoing
operating results and trends and in comparing our financial results
with peer companies, many of which present similar non-GAAP
financial measures to investors.
Non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, financial information
prepared in accordance with GAAP. Investors are encouraged to
review the reconciliation of these non-GAAP financial measures to
their most directly comparable GAAP financial measures provided in
the financial statement tables below.
Billings (non-GAAP). We define billings as revenue
recognized in accordance with GAAP plus the change in deferred
revenue from the beginning to the end of the period less any
deferred revenue balances acquired from business combination(s)
during the period. We consider billings to be a useful metric for
management and investors because billings drive current and future
revenue, which is an important indicator of the health and
viability of our business. There are a number of limitations
related to the use of billings instead of GAAP revenue. First,
billings include amounts that have not yet been recognized as
revenue and are impacted by the term of security and support
agreements. Second, we may calculate billings in a manner that is
different from peer companies that report similar financial
measures. Management accounts for these limitations by providing
specific information regarding GAAP revenue and evaluating billings
together with GAAP revenue.
Free cash flow (non-GAAP). We define free cash flow as
net cash provided by operating activities minus purchases of
property and equipment and excluding any significant non-recurring
items. We believe free cash flow to be a liquidity measure that
provides useful information to management and investors about the
amount of cash generated by the business that, after capital
expenditures, can be used for strategic opportunities, including
repurchasing outstanding common stock, investing in our business,
making strategic acquisitions and strengthening the balance sheet.
A limitation of using free cash flow rather than the GAAP measures
of cash provided by or used in operating activities, investing
activities, and financing activities is that free cash flow does
not represent the total increase or decrease in the cash and cash
equivalents balance for the period because it excludes cash flows
from significant non-recurring items, investing activities other
than capital expenditures and cash flows from financing activities.
Management accounts for this limitation by providing information
about our capital expenditures and other investing and financing
activities on the face of the cash flow statement and under the
caption “Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Liquidity and Capital
Resources” in our most recent Quarterly Report on Form 10-Q and
Annual Report on Form 10-K and by presenting cash flows from
investing and financing activities in our reconciliation of free
cash flow. In addition, it is important to note that other
companies, including companies in our industry, may not use free
cash flow, may calculate free cash flow in a different manner than
we do or may use other financial measures to evaluate their
performance, all of which could reduce the usefulness of free cash
flow as a comparative measure.
Non-GAAP operating income and operating margin. We
define non-GAAP operating income as operating income plus
stock-based compensation, amortization of acquired intangible
assets, less gain on intellectual property matter and, when
applicable, other significant non-recurring items in a given
quarter. Non-GAAP operating margin is defined as non-GAAP operating
income divided by GAAP revenue. We consider these non-GAAP
financial measures to be useful metrics for management and
investors because they exclude the items noted above so that our
management and investors can compare our recurring core business
operating results over multiple periods. There are a number of
limitations related to the use of non-GAAP operating income instead
of operating income calculated in accordance with GAAP. First,
non-GAAP operating income excludes the items noted above. Second,
the components of the costs that we exclude from our calculation of
non-GAAP operating income may differ from the components that peer
companies exclude when they report their non-GAAP results of
operations. Management accounts for these limitations by providing
specific information regarding the GAAP amounts excluded from
non-GAAP operating income and evaluating non-GAAP operating income
together with operating income calculated in accordance with
GAAP.
Non-GAAP net income and diluted net income per share
attributable to Fortinet, Inc. We define non-GAAP net income
as net income plus the items noted above under non-GAAP operating
income and operating margin. In addition, we adjust non-GAAP net
income and diluted net income per share for a tax adjustment
required for an effective tax rate on a non-GAAP basis and
adjustments attributable to non-controlling interests, which
differs from the GAAP effective tax rate. We define non-GAAP
diluted net income per share as non-GAAP net income divided by the
non-GAAP diluted weighted-average shares outstanding. We consider
these non-GAAP financial measures to be useful metrics for
management and investors for the same reasons that we use non-GAAP
operating income and non-GAAP operating margin. However, in order
to provide a more complete picture of our recurring core business
operating results, we include in non-GAAP net income and non-GAAP
diluted net income per share, the tax adjustment required resulting
in an effective tax rate on a non-GAAP basis, which often differs
from the GAAP tax rate. We believe the non-GAAP effective tax rates
we use are reasonable estimates of normalized tax rates for our
current and prior fiscal years under our global operating
structure. The same limitations described above regarding our use
of non-GAAP operating income and non-GAAP operating margin apply to
our use of non-GAAP net income and non-GAAP diluted net income per
share. We account for these limitations by providing specific
information regarding the GAAP amounts excluded from non-GAAP net
income and non-GAAP diluted net income per share and evaluating
non-GAAP net income and non-GAAP diluted net income per share
together with net income and diluted net income per share
calculated in accordance with GAAP.
|
FORTINET, INC. |
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
|
(Unaudited, in millions) |
| |
| |
December 31,
2023 |
|
December 31,
2022 |
| ASSETS |
|
|
|
| CURRENT ASSETS: |
|
|
|
|
Cash and cash equivalents |
$ |
1,397.9 |
|
|
$ |
1,682.9 |
|
|
Short-term investments |
|
1,021.5 |
|
|
|
502.6 |
|
|
Marketable equity securities |
|
21.0 |
|
|
|
25.5 |
|
|
Accounts receivable—net |
|
1,402.0 |
|
|
|
1,261.7 |
|
|
Inventory |
|
484.8 |
|
|
|
264.6 |
|
|
Prepaid expenses and other current assets |
|
101.1 |
|
|
|
73.1 |
|
|
Total current assets |
|
4,428.3 |
|
|
|
3,810.4 |
|
| LONG-TERM INVESTMENTS |
|
— |
|
|
|
45.5 |
|
| PROPERTY AND
EQUIPMENT—NET |
|
1,044.4 |
|
|
|
898.5 |
|
| DEFERRED CONTRACT COSTS |
|
605.6 |
|
|
|
518.2 |
|
| DEFERRED TAX ASSETS |
|
868.8 |
|
|
|
569.4 |
|
| GOODWILL AND OTHER INTANGIBLE
ASSETS—NET |
|
161.8 |
|
|
|
184.0 |
|
| OTHER ASSETS |
|
150.0 |
|
|
|
202.0 |
|
| TOTAL ASSETS |
$ |
7,258.9 |
|
|
$ |
6,228.0 |
|
| LIABILITIES AND
STOCKHOLDERS’ DEFICIT |
|
|
|
| CURRENT LIABILITIES: |
|
|
|
|
Accounts payable |
$ |
204.3 |
|
|
$ |
243.4 |
|
|
Accrued liabilities |
|
360.1 |
|
|
|
248.7 |
|
|
Accrued payroll and compensation |
|
242.3 |
|
|
|
219.4 |
|
|
Income taxes payable |
|
63.6 |
|
|
|
17.6 |
|
|
Deferred revenue |
|
2,848.7 |
|
|
|
2,349.3 |
|
|
Total current liabilities |
|
3,719.0 |
|
|
|
3,078.4 |
|
| DEFERRED REVENUE |
|
2,886.3 |
|
|
|
2,291.0 |
|
| INCOME TAX LIABILITIES |
|
61.9 |
|
|
|
67.8 |
|
| LONG-TERM DEBT |
|
992.3 |
|
|
|
990.4 |
|
| OTHER LIABILITIES |
|
62.8 |
|
|
|
82.0 |
|
|
Total liabilities |
|
7,722.3 |
|
|
|
6,509.6 |
|
| COMMITMENTS AND
CONTINGENCIES |
|
|
|
| STOCKHOLDERS’ DEFICIT: |
|
|
|
|
Common stock |
|
0.8 |
|
|
|
0.8 |
|
|
Additional paid-in capital |
|
1,416.4 |
|
|
|
1,284.2 |
|
|
Accumulated other comprehensive loss |
|
(18.9 |
) |
|
|
(20.2 |
) |
|
Accumulated deficit |
|
(1,861.7 |
) |
|
|
(1,546.4 |
) |
|
Total stockholders’ deficit |
|
(463.4 |
) |
|
|
(281.6 |
) |
| TOTAL LIABILITIES AND
STOCKHOLDERS’ DEFICIT |
$ |
7,258.9 |
|
|
$ |
6,228.0 |
|
|
FORTINET, INC. |
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
|
(Unaudited, in millions, except per share
amounts) |
| |
| |
Three Months Ended |
|
Year Ended |
|
|
December 31,
2023 |
|
December 31,
2022 |
|
December 31,
2023 |
|
December 31,
2022 |
| REVENUE: |
|
|
|
|
|
|
|
|
Product |
$ |
488.1 |
|
|
$ |
540.1 |
|
|
$ |
1,927.3 |
|
|
$ |
1,780.5 |
|
|
Service |
|
927.0 |
|
|
|
742.9 |
|
|
|
3,377.5 |
|
|
|
2,636.9 |
|
|
Total revenue |
|
1,415.1 |
|
|
|
1,283.0 |
|
|
|
5,304.8 |
|
|
|
4,417.4 |
|
| COST OF REVENUE: |
|
|
|
|
|
|
|
|
Product |
|
197.2 |
|
|
|
189.9 |
|
|
|
763.6 |
|
|
|
691.3 |
|
|
Service |
|
118.7 |
|
|
|
107.4 |
|
|
|
473.6 |
|
|
|
393.6 |
|
|
Total cost of revenue |
|
315.9 |
|
|
|
297.3 |
|
|
|
1,237.2 |
|
|
|
1,084.9 |
|
| GROSS PROFIT: |
|
|
|
|
|
|
|
|
Product |
|
290.9 |
|
|
|
350.2 |
|
|
|
1,163.7 |
|
|
|
1,089.2 |
|
|
Service |
|
808.3 |
|
|
|
635.5 |
|
|
|
2,903.9 |
|
|
|
2,243.3 |
|
|
Total gross profit |
|
1,099.2 |
|
|
|
985.7 |
|
|
|
4,067.6 |
|
|
|
3,332.5 |
|
| OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
Research and development |
|
152.5 |
|
|
|
128.9 |
|
|
|
613.8 |
|
|
|
512.4 |
|
|
Sales and marketing |
|
507.4 |
|
|
|
455.9 |
|
|
|
2,006.0 |
|
|
|
1,686.1 |
|
|
General and administrative |
|
55.1 |
|
|
|
44.3 |
|
|
|
211.3 |
|
|
|
169.0 |
|
|
Gain on intellectual property matter |
|
(1.2 |
) |
|
|
(1.2 |
) |
|
|
(4.6 |
) |
|
|
(4.6 |
) |
|
Total operating expenses |
|
713.8 |
|
|
|
627.9 |
|
|
|
2,826.5 |
|
|
|
2,362.9 |
|
| OPERATING INCOME |
|
385.4 |
|
|
|
357.8 |
|
|
|
1,241.1 |
|
|
|
969.6 |
|
| INTEREST INCOME |
|
30.5 |
|
|
|
9.1 |
|
|
|
119.7 |
|
|
|
17.4 |
|
| INTEREST EXPENSE |
|
(5.4 |
) |
|
|
(4.5 |
) |
|
|
(21.0 |
) |
|
|
(18.0 |
) |
| OTHER INCOME
(EXPENSE)—NET |
|
5.1 |
|
|
|
5.8 |
|
|
|
(6.1 |
) |
|
|
(13.5 |
) |
| INCOME BEFORE INCOME TAXES AND
LOSS FROM EQUITY METHOD INVESTMENTS |
|
415.6 |
|
|
|
368.2 |
|
|
|
1,333.7 |
|
|
|
955.5 |
|
| PROVISION FOR INCOME
TAXES |
|
95.2 |
|
|
|
9.2 |
|
|
|
143.8 |
|
|
|
30.8 |
|
| LOSS FROM EQUITY METHOD
INVESTMENTS |
|
(9.5 |
) |
|
|
(45.2 |
) |
|
|
(42.1 |
) |
|
|
(68.1 |
) |
| NET INCOME INCLUDING
NON-CONTROLLING INTERESTS |
|
310.9 |
|
|
|
313.8 |
|
|
|
1,147.8 |
|
|
|
856.6 |
|
| Less: NET LOSS ATTRIBUTABLE TO
NON-CONTROLLING INTERESTS, NET OF TAX |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.7 |
) |
| NET INCOME ATTRIBUTABLE TO
FORTINET, INC. |
$ |
310.9 |
|
|
$ |
313.8 |
|
|
$ |
1,147.8 |
|
|
$ |
857.3 |
|
| Net income per share
attributable to Fortinet, Inc.: |
|
|
|
|
|
|
|
|
Basic |
$ |
0.41 |
|
|
$ |
0.40 |
|
|
$ |
1.47 |
|
|
$ |
1.08 |
|
|
Diluted |
$ |
0.40 |
|
|
$ |
0.40 |
|
|
$ |
1.46 |
|
|
$ |
1.06 |
|
| Weighted-average shares used
to compute net income per share attributable to Fortinet,
Inc.: |
|
|
|
|
|
|
|
|
Basic |
|
764.9 |
|
|
|
780.9 |
|
|
|
778.6 |
|
|
|
791.4 |
|
|
Diluted |
|
772.3 |
|
|
|
791.8 |
|
|
|
788.2 |
|
|
|
805.3 |
|
|
FORTINET, INC. |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
(Unaudited, in millions) |
| |
| |
Year Ended |
|
|
December 31,
2023 |
|
December 31,
2022 |
| CASH FLOWS FROM OPERATING
ACTIVITIES: |
|
|
|
|
Net income including non-controlling interests |
$ |
1,147.8 |
|
|
$ |
856.6 |
|
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
Stock-based compensation |
|
249.0 |
|
|
|
217.3 |
|
|
Amortization of deferred contract costs |
|
266.3 |
|
|
|
223.3 |
|
|
Depreciation and amortization |
|
113.4 |
|
|
|
104.3 |
|
|
Amortization of investment premiums (discounts) |
|
(27.7 |
) |
|
|
4.4 |
|
|
Loss from equity method investments |
|
42.1 |
|
|
|
68.1 |
|
|
Other |
|
18.5 |
|
|
|
23.6 |
|
|
Changes in operating assets and liabilities, net of impact of
business combinations: |
|
|
|
|
Accounts receivable—net |
|
(146.4 |
) |
|
|
(456.7 |
) |
|
Inventory |
|
(253.5 |
) |
|
|
(109.1 |
) |
|
Prepaid expenses and other current assets |
|
(27.6 |
) |
|
|
(7.7 |
) |
|
Deferred contract costs |
|
(353.5 |
) |
|
|
(318.2 |
) |
|
Deferred tax assets |
|
(301.9 |
) |
|
|
(226.4 |
) |
|
Other assets |
|
17.7 |
|
|
|
(35.3 |
) |
|
Accounts payable |
|
(43.1 |
) |
|
|
105.2 |
|
|
Accrued liabilities |
|
97.1 |
|
|
|
55.4 |
|
|
Accrued payroll and compensation |
|
23.4 |
|
|
|
25.0 |
|
|
Income taxes payable |
|
40.3 |
|
|
|
(0.2 |
) |
|
Other liabilities |
|
(21.7 |
) |
|
|
23.5 |
|
|
Deferred revenue |
|
1,095.3 |
|
|
|
1,177.5 |
|
|
Net cash provided by operating activities |
|
1,935.5 |
|
|
|
1,730.6 |
|
| CASH FLOWS FROM INVESTING
ACTIVITIES: |
|
|
|
|
Purchases of investments |
|
(1,855.8 |
) |
|
|
(389.1 |
) |
|
Sales of investments |
|
4.0 |
|
|
|
3.0 |
|
|
Maturities of investments |
|
1,414.8 |
|
|
|
1,462.0 |
|
|
Purchases of property and equipment |
|
(204.1 |
) |
|
|
(281.2 |
) |
|
Purchase of investment in privately held company |
|
(8.5 |
) |
|
|
— |
|
|
Payments made in connection with business combinations, net of cash
acquired |
|
— |
|
|
|
(30.8 |
) |
|
Other |
|
0.3 |
|
|
|
— |
|
|
Net cash provided by (used in) investing
activities |
|
(649.3 |
) |
|
|
763.9 |
|
| CASH FLOWS FROM FINANCING
ACTIVITIES: |
|
|
|
|
Repurchase and retirement of common stock |
|
(1,500.5 |
) |
|
|
(1,991.2 |
) |
|
Proceeds from issuance of common stock |
|
43.8 |
|
|
|
26.1 |
|
|
Taxes paid related to net share settlement of equity awards |
|
(112.5 |
) |
|
|
(160.4 |
) |
|
Other |
|
(1.2 |
) |
|
|
(4.8 |
) |
|
Net cash used in financing activities |
|
(1,570.4 |
) |
|
|
(2,130.3 |
) |
| EFFECT OF EXCHANGE RATE
CHANGES ON CASH AND CASH EQUIVALENTS |
|
(0.8 |
) |
|
|
(0.4 |
) |
| NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS |
|
(285.0 |
) |
|
|
363.8 |
|
| CASH AND CASH
EQUIVALENTS—Beginning of year |
|
1,682.9 |
|
|
|
1,319.1 |
|
| CASH AND CASH EQUIVALENTS—End
of year |
$ |
1,397.9 |
|
|
$ |
1,682.9 |
|
Reconciliations of non-GAAP results of operations measures
to the nearest comparable GAAP measures
(Unaudited, in millions, except per share
amounts) |
| |
|
Reconciliation of GAAP operating income to non-GAAP
operating income, operating margin, net income attributable to
Fortinet, Inc. and diluted net income per share attributable to
Fortinet, Inc. |
| |
| |
Three Months Ended |
|
Year Ended |
|
|
December 31,
2023 |
|
December 31,
2022 |
|
December 31,
2023 |
|
December 31,
2022 |
| Reconciliation of
non-GAAP operating income: |
|
|
|
|
|
|
|
|
GAAP operating income |
$ |
385.4 |
|
|
$ |
357.8 |
|
|
$ |
1,241.1 |
|
|
$ |
969.6 |
|
| GAAP operating
margin |
|
27.2 |
% |
|
|
27.9 |
% |
|
|
23.4 |
% |
|
|
21.9 |
% |
| Add
back: |
|
|
|
|
|
|
|
|
Stock‐based compensation |
|
64.0 |
|
|
|
55.3 |
|
|
|
251.6 |
|
|
|
219.8 |
|
|
Amortization of acquired intangible assets |
|
5.3 |
|
|
|
5.7 |
|
|
|
18.9 |
|
|
|
23.3 |
|
|
Gain on intellectual property matter |
|
(1.2 |
) |
|
|
(1.2 |
) |
|
|
(4.6 |
) |
|
|
(4.6 |
) |
| Non‐GAAP operating income |
$ |
453.5 |
|
|
$ |
417.6 |
|
|
$ |
1,507.0 |
|
|
$ |
1,208.1 |
|
| Non‐GAAP operating
margin |
|
32.0 |
% |
|
|
32.5 |
% |
|
|
28.4 |
% |
|
|
27.3 |
% |
| |
|
|
|
|
|
|
|
| Reconciliation of
non-GAAP net income attributable to Fortinet, Inc.: |
|
|
|
|
|
|
|
| GAAP net income attributable
to Fortinet, Inc. |
$ |
310.9 |
|
|
$ |
313.8 |
|
|
$ |
1,147.8 |
|
|
$ |
857.3 |
|
| Add
back: |
|
|
|
|
|
|
|
|
Stock‐based compensation |
|
64.0 |
|
|
|
55.3 |
|
|
|
251.6 |
|
|
|
219.8 |
|
|
Amortization of acquired intangible assets |
|
5.3 |
|
|
|
5.7 |
|
|
|
18.9 |
|
|
|
23.3 |
|
|
Gain on intellectual property matter |
|
(1.2 |
) |
|
|
(1.2 |
) |
|
|
(4.6 |
) |
|
|
(4.6 |
) |
|
Tax adjustment (a) |
|
13.0 |
|
|
|
(63.6 |
) |
|
|
(128.1 |
) |
|
|
(172.2 |
) |
|
Non-cash charge on equity method investment |
|
— |
|
|
|
39.7 |
|
|
|
— |
|
|
|
39.7 |
|
|
Adjustments attributable non-controlling interests
(b) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1.7 |
) |
| Non-GAAP net income
attributable to Fortinet, Inc. |
$ |
392.0 |
|
|
$ |
349.7 |
|
|
$ |
1,285.6 |
|
|
$ |
961.6 |
|
| |
|
|
|
|
|
|
|
| Non-GAAP net income
per share attributable to Fortinet, Inc., diluted |
|
|
|
|
|
|
|
| Non-GAAP net income
attributable to Fortinet, Inc. |
$ |
392.0 |
|
|
$ |
349.7 |
|
|
$ |
1,285.6 |
|
|
$ |
961.6 |
|
|
Non-GAAP shares used in diluted net income per share attributable
to Fortinet, Inc. calculations |
|
772.3 |
|
|
|
791.8 |
|
|
|
788.2 |
|
|
|
805.3 |
|
| Non-GAAP net income per share
attributable to Fortinet, Inc., diluted |
$ |
0.51 |
|
|
$ |
0.44 |
|
|
$ |
1.63 |
|
|
$ |
1.19 |
|
| |
|
|
|
|
|
|
|
| Reconciliation of
non-GAAP net income per share attributable to Fortinet, Inc.,
diluted |
|
|
|
|
|
|
|
| GAAP net income per share
attributable to Fortinet, Inc., diluted |
$ |
0.40 |
|
|
$ |
0.40 |
|
|
$ |
1.46 |
|
|
$ |
1.06 |
|
| Add
back: |
|
|
|
|
|
|
|
|
Non-GAAP adjustments to net income per share attributable to
Fortinet, Inc. |
|
0.11 |
|
|
|
0.04 |
|
|
|
0.17 |
|
|
|
0.13 |
|
| Non-GAAP net income per share
attributable to Fortinet, Inc., diluted |
$ |
0.51 |
|
|
$ |
0.44 |
|
|
$ |
1.63 |
|
|
$ |
1.19 |
|
(a) Non-GAAP financial information is adjusted to an effective
tax rate of 17% in the three months and year ended
December 31, 2023 and 2022, respectively, on a non-GAAP basis,
which differs from the GAAP effective tax rate.
(b) Adjustments related to the non-GAAP results attributable to
non-controlling interests, which were adjusted to an effective tax
rate of 31% for the subsidiary of Alaxala Networks Corporation in
2022.
|
Reconciliation of net cash provided by operating activities
to free cash flow |
| |
Three Months Ended |
|
Year Ended |
| |
December 31,
2023 |
|
December 31,
2022 |
|
December 31,
2023 |
|
December 31,
2022 |
|
Net cash provided by operating activities |
$ |
191.7 |
|
|
$ |
528.1 |
|
|
$ |
1,935.5 |
|
|
$ |
1,730.6 |
|
|
Less: Purchases of property and equipment |
|
(26.9 |
) |
|
|
(30.9 |
) |
|
|
(204.1 |
) |
|
|
(281.2 |
) |
| Free cash flow |
$ |
164.8 |
|
|
$ |
497.2 |
|
|
$ |
1,731.4 |
|
|
$ |
1,449.4 |
|
| Net cash provided by (used in)
investing activities |
$ |
(71.6 |
) |
|
$ |
217.4 |
|
|
$ |
(649.3 |
) |
|
$ |
763.9 |
|
| Net cash used in financing
activities |
$ |
(910.1 |
) |
|
$ |
(27.4 |
) |
|
$ |
(1,570.4 |
) |
|
$ |
(2,130.3 |
) |
|
Reconciliation of total revenue to total
billings |
| |
Three Months Ended |
|
Year Ended |
| |
December 31,
2023 |
|
December 31,
2022 |
|
December 31,
2023 |
|
December 31,
2022 |
|
Total revenue |
$ |
1,415.1 |
|
$ |
1,283.0 |
|
|
$ |
5,304.8 |
|
$ |
4,417.4 |
|
|
Add: Change in deferred revenue |
|
449.7 |
|
|
446.8 |
|
|
|
1,094.7 |
|
|
1,187.4 |
|
|
Less: Deferred revenue balance acquired in business
acquisitions |
|
— |
|
|
(10.8 |
) |
|
|
— |
|
|
(10.8 |
) |
| Total billings |
$ |
1,864.8 |
|
$ |
1,719.0 |
|
|
$ |
6,399.5 |
|
$ |
5,594.0 |
|
|
Investor Contact: |
|
Media Contact: |
| |
|
|
| Peter Salkowski |
|
Michelle Zimmermann |
| Fortinet, Inc. |
|
Fortinet, Inc. |
| 408-331-4595 |
|
408-235-7700 |
| psalkowski@fortinet.com |
|
pr@fortinet.com |
Fortinet (LSE:0IR9)
Graphique Historique de l'Action
De Oct 2024 à Nov 2024
Fortinet (LSE:0IR9)
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De Nov 2023 à Nov 2024
