Fortinet Reports Fourth Quarter and Full Year 2021 Financial Results

Issued by: Fortinet

3/2/2022
Fourth Quarter 2021 Highlights
  • Total revenue of $963.6 million, up 29% year over year
  • Product revenue of $378.9 million, up 31% year over year
  • Service revenue of $584.7 million, up 27% year over year
  • Billings of $1.31 billion, up 36% year over year1
  • Bookings of $1.43 billion, up 49% year over year2
  • GAAP operating margin of 22.3%
  • Non-GAAP operating margin of 28.5%1
  • Cash paid for share repurchases of $571.8 million

Full Year 2021 Highlights

  • Total revenue of $3.34 billion, up 29% year over year
  • Product revenue of $1.26 billion, up 37% year over year
  • Service revenue of $2.09 billion, up 24% year over year
  • Billings of $4.18 billion, up 35% year over year1
  • Bookings of $4.33 billion, up 40% year over year2
  • Deferred revenue of $3.45 billion, up 33% year over year
  • GAAP operating margin of 19.5%
  • Non-GAAP operating margin of 26.2%1
  • Cash flow from operations of $1.50 billion
  • Cash paid for share repurchases of $741.8 million
  • Free cash flow of $1.20 billion1

SUNNYVALE, Calif., Feb. 03, 2022 (GLOBE NEWSWIRE) — Fortinet® (Nasdaq: FTNT), a global leader in broad, integrated and automated cybersecurity solutions, today announced financial results for the fourth quarter and full year ended December 31, 2021.

“Revenue growth accelerated to 29% in 2021, after three consecutive years with revenue growth of 20% or more. Cash flow from operations was $1.5 billion and free cash flow was a record $1.2 billion for the year,” said Ken Xie, Founder, Chairman and Chief Executive Officer. “Our 2021 performance was driven by increased demand for our cybersecurity solutions and exceptional execution from our global operations and sales teams and excellent support from our channel partners and distributors. Fortinet’s integrated and single platform approach to security is resonating with customers that want to effectively protect their corporate networks from a wide range of attack vectors. Given our robust pipeline and strong business momentum, we expect several more years of solid growth as Fortinet is well positioned to address our $174 billion market opportunity.”

Financial Highlights for the Fourth Quarter of 2021

  • Revenue: Total revenue was $963.6 million for the fourth quarter of 2021, an increase of 28.8% compared to $748.0 million for the same quarter of 2020.
  • Product Revenue: Product revenue was $378.9 million for the fourth quarter of 2021, an increase of 31.4% compared to $288.4 million for the same quarter of 2020.
  • Service Revenue: Service revenue was $584.7 million for the fourth quarter of 2021, an increase of 27.2% compared to $459.6 million for the same quarter of 2020.
  • Billings1: Total billings were $1.31 billion for the fourth quarter of 2021, an increase of 35.9% compared to $960.9 million for the same quarter of 2020.
  • Bookings2: Total bookings were $1.43 billion for the fourth quarter of 2021, an increase of 48.7% compared to $960.3 million for the same quarter of 2020. Backlog2 was $161.9 million as of December 31, 2021 an increase of $149.7 million compared to $12.2 million as of December 31, 2020.
  • GAAP Operating Income and Margin: GAAP operating income was $214.9 million for the fourth quarter of 2021, representing a GAAP operating margin of 22.3%. GAAP operating income was $169.4 million for the same quarter of 2020, representing a GAAP operating margin of 22.6%.
  • Non-GAAP Operating Income and Margin1: Non-GAAP operating income was $274.7 million for the fourth quarter of 2021, representing a non-GAAP operating margin of 28.5%. Non-GAAP operating income was $219.9 million for the same quarter of 2020, representing a non-GAAP operating margin of 29.4%.
  • GAAP Net Income and Diluted Net Income Per Share Attributable to Fortinet, Inc.: GAAP net income was $199.0 million for the fourth quarter of 2021, compared to GAAP net income of $146.7 million for the same quarter of 2020. GAAP diluted net income per share was $1.19 for the fourth quarter of 2021, based on 167.0 million diluted weighted-average shares outstanding, compared to GAAP diluted net income per share of $0.89 for the same quarter of 2020, based on 165.5 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 $205.8 million for the fourth quarter of 2021, compared to non-GAAP net income of $175.5 million for the same quarter of 2020. Non-GAAP diluted net income per share was $1.23 for the fourth quarter of 2021, based on 167.0 million diluted weighted-average shares outstanding, compared to $1.06 for the same quarter of 2020, based on 165.5 million diluted weighted-average shares outstanding.
  • Cash Flow: Cash flow from operations was $366.8 million for the fourth quarter of 2021, compared to $296.5 million for the same quarter of 2020.
  • Free Cash Flow1: Free cash flow was $215.5 million for the fourth quarter of 2021, compared to $264.2 million for the same quarter of 2020.

Financial Highlights for the Full Year 2021

  • Revenue: Total revenue was $3.34 billion for 2021, an increase of 28.8% compared to $2.59 billion in 2020.
  • Product Revenue: Product revenue was $1.26 billion for 2021, an increase of 36.9% compared to $916.4 million in 2020.
  • Service Revenue: Service revenue was $2.09 billion for 2021, an increase of 24.4% compared to $1.68 billion in 2020.
  • Billings1: Total billings were $4.18 billion for 2021, an increase of 35.3% compared to $3.09 billion in 2020.
  • Bookings2: Total bookings were $4.33 billion for 2021, an increase of 40.2% compared to $3.09 billion in 2020.
  • Deferred Revenue: Total deferred revenue was $3.45 billion as of December 31, 2021, an increase of 32.5% compared to $2.61 billion as of December 31, 2020.
  • GAAP Operating Income and Margin: GAAP operating income was $650.4 million for 2021, representing a GAAP operating margin of 19.5%. GAAP operating income was $531.8 million for 2020, representing a GAAP operating margin of 20.5%.
  • Non-GAAP Operating Income and Margin1: Non-GAAP operating income was $875.5 million for 2021, representing a non-GAAP operating margin of 26.2%. Non-GAAP operating income was $698.0 million for 2020, representing a non-GAAP operating margin of 26.9%.
  • GAAP Net Income and Diluted Net Income Per Share Attributable to Fortinet, Inc.: GAAP net income was $606.8 million for 2021, compared to GAAP net income of $488.5 million for 2020. GAAP diluted net income per share was $3.63 for 2021, based on 167.1 million diluted weighted-average shares outstanding, compared to GAAP diluted net income per share of $2.91 for 2020, based on 167.7 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 $666.0 million for 2021, compared to non-GAAP net income of $562.6 million for 2020. Non-GAAP diluted net income per share was $3.99 for 2021, based on 167.1 million diluted weighted-average shares outstanding, compared to $3.35 for 2020, based on 167.7 million diluted weighted-average shares outstanding.
  • Cash Flow: In 2021, cash flow from operations was $1.50 billion compared to $1.08 billion in 2020.
  • Free Cash Flow1: Free cash flow was $1.20 billion during 2021, compared to $907.8 million in 2020.

Guidance

For the first quarter of 2022, Fortinet currently expects:

  • Revenue in the range of $865 million to $895 million
  • Billings in the range of $1.050 billion to $1.090 billion
  • Non-GAAP gross margin in the range of 75.5% to 76.5%
  • Non-GAAP operating margin in the range of 19.5% to 20.5%
  • Diluted non-GAAP net income per share attributable to Fortinet, Inc. in the range of $0.75 to $0.80, assuming a non-GAAP effective tax rate of 18%. This assumes a diluted share count of 166 million to 168 million.

For the fiscal year 2022, Fortinet currently expects:

  • Revenue in the range of $4.275 billion to $4.325 billion
  • Service revenue in the range of $2.685 billion to $2.715 billion
  • Billings in the range of $5.400 billion to $5.480 billion
  • Non-GAAP gross margin in the range of 74.0% to 76.0%
  • Non-GAAP operating margin in the range of 24.0% to 26.0%
  • Diluted non-GAAP net income per share attributable to Fortinet, Inc. in the range of $4.85 to $5.00, assuming a non-GAAP effective tax rate of 18%. This assumes a diluted share count of 169 million to 171 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 matter. 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”.
2 Bookings represents the total value of all orders received during the fiscal period. Backlog represents orders received but not fulfilled and excludes Alaxala. When an order is fulfilled, billings and revenue are recognized.

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. The call can be accessed by dialing (877) 303-6913 (domestic) or (224) 357-2188 (international) with conference ID #1957267. 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. A replay of this conference call can also be accessed through February 10, 2022, by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) with conference ID #1957267.

First Quarter 2022 Virtual Conference Participation Schedule:

  • Morgan Stanley Technology, Media & Telecom Conference
    March 9, 2022 – San Francisco, CA

Members of Fortinet’s management team are expected to present at these conferences 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 and listen to the webcast of each event, please visit the Investor Relations page of Fortinet’s website at https://investor.fortinet.com. The schedule is subject to change.

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