SUNNYVALE, Calif., Nov. 02, 2022 (GLOBE NEWSWIRE) —  Fortinet® (Nasdaq: FTNT), a global leader in broad, integrated and automated cybersecurity solutions, today announced financial results for the third quarter ended September 30, 2022.

“We continued to gain market share in the large addressable and fast-growing cybersecurity industry. Revenue and billings growth of over 30% in the third quarter significantly outpaced industry growth rates,” said Ken Xie, Founder, Chairman, and Chief Executive Officer. “Fortinet’s future growth will be driven by the convergence of security and networking, the industry trend of vendor and product consolidation, the elevated threat environment, and a greater focus on offering services for existing and new customers.”

Financial Highlights for the Third Quarter of 2022

• Revenue: Total revenue was $1.15 billion for the third quarter of 2022, an increase of 32.6% compared to $867.2 million for the same quarter of 2021.
• Product Revenue: Product revenue was $468.7 million for the third quarter of 2022, an increase of 39.0% compared to $337.1 million for the same quarter of 2021.
• Service Revenue: Service revenue was $680.8 million for the third quarter of 2022, an increase of 28.4% compared to $530.1 million for the same quarter of 2021.
• Billings¹: Total billings were $1.41 billion for the third quarter of 2022, an increase of 32.6% compared to $1.06 billion for the same quarter of 2021.
• Deferred Revenue: Total deferred revenue was $4.19 billion as of September 30, 2022, an increase of 35.0% compared to $3.11 billion as of September 30, 2021.
• GAAP Operating Income and Margin: GAAP operating income was $265.5 million for the third quarter of 2022, representing a GAAP operating margin of 23.1%. GAAP operating income was $166.4 million for the same quarter of 2021, representing a GAAP operating margin of 19.2%.
• Non-GAAP Operating Income and Margin¹: Non-GAAP operating income was $324.9 million for the third quarter of 2022, representing a non-GAAP operating margin of 28.3%. Non-GAAP operating income was $223.6 million for the same quarter of 2021, representing a non-GAAP operating margin of 25.8%.
• GAAP Net Income and Diluted Net Income Per Share Attributable to Fortinet, Inc.²: GAAP net income was $231.6 million for the third quarter of 2022, compared to GAAP net income of $163.1 million for the same quarter of 2021. GAAP diluted net income per share was $0.29 for the third quarter of 2022, based on 798.6 million diluted weighted-average shares outstanding, compared to GAAP diluted net income per share of $0.19 for the same quarter of 2021, based on 838.6 million diluted weighted-average shares outstanding.
• Non-GAAP Net Income and Diluted Net Income Per Share Attributable to Fortinet, Inc.^1,2: Non-GAAP net income was $262.7 million for the third quarter of 2022, compared to non-GAAP net income of $165.9 million for the same quarter of 2021. Non-GAAP diluted net income per share was $0.33 for the third quarter of 2022, based on 798.6 million diluted weighted-average shares outstanding, compared to $0.20 for the same quarter of 2021, based on 838.6 million diluted weighted-average shares outstanding.
• Cash Flow: Cash flow from operations was $483.0 million for the third quarter of 2022, compared to $398.8 million for the same quarter of 2021.
• Free Cash Flow¹: Free cash flow was $395.2 million for the third quarter of 2022, compared to $329.8 million for the same quarter of 2021.
• Share Repurchase Program²: During the three and nine months ended September 30, 2022, Fortinet repurchased 10.2 million and 36.0 million shares of its common stock, respectively, at an average price of $49.15 and $55.37 per share, respectively, and for an aggregate purchase price of  $500.0 million and $1.99 billion, respectively. During the three and nine months ended September 30, 2021, Fortinet repurchased 1.8 million and 4.1 million shares of its common stock, respectively, at an average price of $58.81 and $48.59 per share, respectively, and for an aggregate purchase price of $108.8 million and $200.4 million.

Guidance

For the fourth quarter of 2022, Fortinet currently expects:

• Revenue in the range of $1.275 billion to $1.315 billion
• Billings in the range of $1.665 billion to $1.720 billion
• Non-GAAP gross margin in the range of 75.0% to 76.0%
• Non-GAAP operating margin in the range of 30.0% to 31.0%
• Diluted non-GAAP net income per share attributable to Fortinet, Inc. in the range of $0.38 to $0.40, assuming a non-GAAP effective tax rate of 17%. This assumes a diluted share count of 795 million to 805 million.

For the fiscal year 2022, Fortinet currently expects:

• Revenue in the range of $4.410 billion to $4.450 billion
• Service revenue in the range of $2.645 billion to $2.655 billion
• Billings in the range of $5.540 billion to $5.595 billion
• Non-GAAP gross margin in the range of 75.0% to 76.0%
• Non-GAAP operating margin in the range of 26.0% to 27.0%
• Diluted non-GAAP net income per share attributable to Fortinet, Inc. in the range of $1.13 to $1.15, assuming a non-GAAP effective tax rate of 17%. This assumes a diluted share count of 800 million to 810 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”.
² All share and per share amounts presented herein have been retroactively adjusted to reflect the five-for-one forward stock split which was effective June 22, 2022.

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.

Fourth Quarter 2022 Conference Participation Schedule:

• Stifel Midwest One-on-One Growth Conference
  November 10, 2022

• Wells Fargo TMT Summit
  November 29, 2022

• Barclays Global Technology, Media & Telecommunications Conference
  December 7, 2022

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, 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.