Fortinet has announced financial results for the third quarter ended September 30, 2021.
Ken Xie, founder, chairman, and chief executive officer, Fortinet, said, “We are extremely pleased with our third quarter performance as we exceeded $1 billion in quarterly billings for the first time in Fortinet’s history. Additionally, Gartner again recognised our Secure SD-WAN solution as a Leader in the 2021 Magic Quadrant for WAN Edge Infrastructure while placing highest in its ability to execute. The total addressable market for network security is rapidly expanding from the data centre outward to the local and wide-area networks, to the work-from-anywhere environment and to the cloud. We are focused on leveraging our ASIC-supported security fabric platform across this expanding total addressable market to drive better than industry average long-term growth for Fortinet.”
Financial highlights for the third quarter of 2021
- Revenue: Total revenue was $867.2 million for the third quarter of 2021, an increase of 33.2 per cent compared to $651.1 million for the same quarter of 2020.
- Product revenue: Product revenue was $337.1 million for the third quarter of 2021, an increase of 50.6 per cent compared to $223.8 million for the same quarter of 2020.
- Service revenue: Service revenue was $530.1 million for the third quarter of 2021, an increase of 24.1 per cent compared to $427.3 million for the same quarter of 2020.
- Billings (1): Total billings were $1.06 billion for the third quarter of 2021, an increase of 41.9 per cent compared to $749.8 million for the same quarter of 2020.
- Deferred revenue: Total deferred revenue was $3.11 billion as of September 30, 2021, an increase of 29.9 per cent compared to $2.39 billion as of September 30, 2020.
- GAAP operating income and margin: GAAP operating income was $166.4 million for the third quarter of 2021, representing a GAAP operating margin of 19.2 per cent. GAAP operating income was $126.9 million for the same quarter of 2020, representing a GAAP operating margin of 19.5 per cent.
- Non-GAAP operating income and margin (1): Non-GAAP operating income was $223.6 million for the third quarter of 2021, representing a non-GAAP operating margin of 25.8 per cent. Non-GAAP operating income was $178.6 million for the same quarter of 2020, representing a non-GAAP operating margin of 27.4 per cent.
- GAAP net income and diluted net income per share attributable to Fortinet, Inc. common stockholders: GAAP net income was $163.1 million for the third quarter of 2021, compared to GAAP net income of $123.4 million for the same quarter of 2020. GAAP diluted net income per share was $0.97 for the third quarter of 2021, based on 167.7 million diluted weighted-average shares outstanding, compared to GAAP diluted net income per share of $0.75 for the same quarter of 2020, based on 165.6 million diluted weighted-average shares outstanding.
- Non-GAAP net income and diluted net income per share attributable to Fortinet, Inc. common stockholders (1): Non-GAAP net income was $165.9 million for the third quarter of 2021, compared to non-GAAP net income of $145.4 million for the same quarter of 2020. Non-GAAP diluted net income per share was $0.99 for the third quarter of 2021, based on 167.7 million diluted weighted-average shares outstanding, compared to $0.88 for the same quarter of 2020, based on 165.6 million diluted weighted-average shares outstanding.
- Cash flow: Cash flow from operations was $398.8 million for the third quarter of 2021, compared to $220.8 million for the same quarter of 2020.
- Free cash flow (1): Free cash flow was $329.8 million for the third quarter of 2021, compared to $185.7 million for the same quarter of 2020.
- Share repurchase program: In October 2021, Fortinet’s Board of Directors authorised a $1.25 billion increase in the authorised stock repurchase under the Repurchase Program and extended the term of the Repurchase Program to February 28, 2023. As of November 1, 2021, approximately $2 billion remained available for future share repurchases.
OUTLOOK
For the fourth quarter of 2021, Fortinet currently expects:
- Revenue in the range of $940 million to $970 million.
- Billings in the range of $1.165 billion to $1.215 billion.
- Non-GAAP gross margin in the range of 75.0 per cent to 76.0 per cent.
- Non-GAAP operating margin in the range of 27.0 per cent to 28.0 per cent.
- Diluted non-GAAP net income per share attributable to Fortinet, Inc. common stockholders in the range of $1.10 to $1.15, assuming a non-GAAP effective tax rate of 21 per cent. This assumes a diluted share count of 168 million to 170 million.
For the fiscal year 2021, Fortinet currently expects:
- Revenue in the range of $3.320 billion to $3.350 billion.
- Service revenue in the range of $2.080 billion to $2.090 billion.
- Billings in the range of $4.040 billion to $4.090 billion.
- Non-GAAP gross margin in the range of 76.5 per cent to 77.5 per cent.
- Non-GAAP operating margin in the range of 25.5 per cent to 26.5 per cent.
- Diluted non-GAAP net income per share attributable to Fortinet, Inc. common stockholders in the range of $3.85 to $3.95, assuming a non-GAAP effective tax rate of 21 per cent. This assumes a diluted share count of 167 million to 169 million.
