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06.02.2024 22:05:06 - dpa-AFX: GNW-Adhoc: Fortinet Reports Fourth Quarter and Full Year 2023 Financial Results
Fourth Quarter 2023 Highlights
Full Year 2023 Highlights
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
the same quarter of 2022, representing a non-GAAP operating margin of 32.5%.
based on 772.3 million diluted weighted-average shares outstanding, compared
shares outstanding, compared to $0.44 for the same quarter of 2022, based on
Financial Highlights for the Full Year 2023
* Non-GAAP Operating Income and Margin(1): Non-GAAP operating income was $1.51
Guidance
For the first quarter of 2024, Fortinet currently expects:
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:
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:
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 (http://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 (https://www.fortinet.com/nse-
training?utm_source=website&utm_campaign=nse-training), 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
(https://www.fortinet.com/fortiguard/labs?utm_source=website&utm_campaign=fortig
uardlabs), 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
(https://www.fortinet.com/blog?utm_source=website&utm_medium=blog&utm_campaign=b
log) or FortiGuard Labs
(https://www.fortinet.com/fortiguard/labs?utm_source=website&utm_campaign=fortig
uardlabs).
Copyright © 2024 Fortinet, Inc. All rights reserved. The symbols ® and (TM) 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
(http://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.
ASSETS
CURRENT ASSETS:
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT:
REVENUE:
COST OF REVENUE:
GROSS PROFIT:
OPERATING EXPENSES:
General and
administrative 55.1 44.3 211.3 169.0
Gain on intellectual
OTHER INCOME
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
NET INCOME INCLUDING
NON-CONTROLLING
INTERESTS 310.9 313.8 1,147.8 856.6
Less: NET LOSS
ATTRIBUTABLE TO NON-
CONTROLLING INTERESTS,
NET INCOME ATTRIBUTABLE
Net income per share
attributable to
Fortinet, Inc.:
Weighted-average shares
used to compute net
income per share
attributable to
Fortinet, Inc.:
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:
Changes in operating assets and liabilities, net
of impact of business combinations:
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments made in connection with business
CASH FLOWS FROM FINANCING ACTIVITIES:
Taxes paid related to net share settlement of
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
NET INCREASE (DECREASE) IN CASH AND CASH
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.
Reconciliation of
non-GAAP operating
income:
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
Non-GAAP operating
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
Non-cash charge on
equity method
investment - 39.7 - 39.7
Adjustments
attributable non-
controlling interests
Non-GAAP net income
attributable to
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.
Non-GAAP net income
per share
attributable to
Fortinet, Inc.,
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
Non-GAAP net income
per share
attributable to
Fortinet, Inc.,
(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
Net cash provided by
operating activities $ 191.7 $ 528.1 $ 1,935.5 $ 1,730.6
Less: Purchases of
Net cash provided by
(used in) investing
Net cash used in
Reconciliation of total revenue to total billings
Add: Change in deferred
revenue 449.7 446.8 1,094.7 1,187.4
Less: Deferred revenue
balance acquired in
psalkowski@fortinet.com pr@fortinet.comÂ
* Total revenue of $1.42 billion, up 10.3% year over year * Billings of $1.86 billion, up 8.5% year over year(1) * GAAP operating income of $385 million * Non-GAAP operating income of $454 million(1) * 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 year(1)
* 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 year(1)
* 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 year(1)
* Cash flow from operations of $1.94 billion
* Free cash flow of $1.73 billion(1)
* 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.
* Billings(1): 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 Margin(1): 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 Flow(1): 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.
* Billings(1): 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 Margin(1): 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 Flow(1): 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 (http://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 (https://www.fortinet.com/nse-
training?utm_source=website&utm_campaign=nse-training), 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
(https://www.fortinet.com/fortiguard/labs?utm_source=website&utm_campaign=fortig
uardlabs), 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
(https://www.fortinet.com/blog?utm_source=website&utm_medium=blog&utm_campaign=b
log) or FortiGuard Labs
(https://www.fortinet.com/fortiguard/labs?utm_source=website&utm_campaign=fortig
uardlabs).
Copyright © 2024 Fortinet, Inc. All rights reserved. The symbols ® and (TM) 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
(http://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, December 31,
2023 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 December December December
31, 31, 31, 31,
2023 2022 2023 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, December 31,
2023 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 December December
31, 31, 31, December 31,
2023 2022 2023 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 December
31, 31, December 31, December 31,
2023 2022 2023 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 December December December
31, 31, 31, 31,
2023 2022 2023 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.comÂ
| Name | WKN | Börse | Kurs | Datum/Zeit | Diff. | Diff. % | Geld | Brief | Erster | Schluss | |
|---|---|---|---|---|---|---|---|---|---|---|---|
 |
FORTINET INC. DL-,001 | A0YEFE | Frankfurt | 56,190 | 24.05.24 08:03:09 | -1,260 | -2,19% | 0,000 | 0,000 | 56,190 | 56,190 |
