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Fortinet Reports First Quarter 2016 Financial Results

--  Billings of $330.5 million, up 30% year over year(1)
--  Revenue of $284.6 million, up 34% year over year
--  Non-GAAP diluted net income per share of $0.12(1)
--  Cash flow from operations of $100.6 million
--  Free cash flow of $70.6 million(1)
--  Cash, cash equivalents and investments of $1.19 billion
--  Deferred revenue of $837.2 million, up 39% year over year



Fortinet® FTNT, -1.09% a global leader in high performance cyber security solutions, today announced financial results for the first quarter ended March 31, 2016.

"During the first quarter, Fortinet executed very well and outperformed across all key metrics," said Ken Xie, founder, chairman and chief executive officer. "The increasing complexity of the IT security landscape is driving customer adoption of broad, integrated platforms, which has been our vision from the company's inception. Fortinet's Security Fabric is a strategic asset, since it allows customers to protect and gain intelligence on all points in the network -- from IoT to cloud -- through a unified operating system and management platform. This, along with recently announced products like our FortiGate-6000E Series of high-performance systems, strengthens our competitive position, expands our market opportunity, and helps to drive continued growth in 2016 and beyond."

Financial Highlights for the First Quarter of 2016

--  Billings(1): Total billings were $330.5 million for the first quarter of
    2016, an increase of 30% compared to $254.3 million in the same quarter
    of 2015.



--  Revenue: Total revenue was $284.6 million for the first quarter of 2016,
    an increase of 34% compared to $212.9 million in the same quarter of
    2015. Within total revenue, product revenue was $124.6 million, an
    increase of 28% compared to $97.5 million in the same quarter of 2015.
    Service revenue was $160.0 million, an increase of 39% compared to
    $115.4 million in the same quarter of 2015.



--  Deferred Revenue: Total deferred revenue was $837.2 million as of March
    31, 2016, an increase of $45.9 million compared to $791.3 million as of
    December 31, 2015.



--  Cash and Cash Flow(2): As of March 31, 2016, cash, cash equivalents and
    investments were $1.19 billion, compared to $1.16 billion as of December
    31, 2015. In the first quarter of 2016, cash flow from operations was
    $100.6 million compared to $64.6 million in the same quarter of 2015.
    Free cash flow(1) was $70.6 million during the first quarter of 2016
    compared to $59.7 million in the same quarter of 2015.



--  GAAP Operating Income or Loss: GAAP operating loss was $5.7 million for
    the first quarter of 2016, representing a GAAP operating margin of -2%.
    GAAP operating income was $0.9 million for the same quarter of 2015,
    representing a GAAP operating margin of 0.4%.



--  Non-GAAP Operating Income(1): Non-GAAP operating income was $30.1
    million for the first quarter of 2016, representing a non-GAAP operating
    margin of 11%. Non-GAAP operating income was $20.1 million for the same
    quarter of 2015, representing a non-GAAP operating margin of 9%.



--  GAAP Net Income or Loss and Diluted Net Income or Loss Per Share: GAAP
    net loss was $3.4 million for the first quarter of 2016, compared to
    GAAP net income of $1.6 million for the same quarter of 2015. GAAP
    diluted net loss per share was $0.02 for the first quarter of 2016,
    compared to GAAP diluted net income per share of $0.01 for the same
    quarter of 2015.



--  Non-GAAP Net Income and Diluted Net Income Per Share(1): Non-GAAP net
    income was $20.1 million for the first quarter of 2016, compared to non-
    GAAP net income of $13.5 million for the same quarter of 2015. Non-GAAP
    diluted net income per share was $0.12 for the first quarter of 2016,
    compared to $0.08 for the same quarter of 2015.



(1) A reconciliation of GAAP to non-GAAP financial 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) During the first quarter of 2016, we repurchased $50.0 million of our common stock under our share repurchase program. During the first quarter of 2015, there were no shares repurchased under our repurchase program.

Conference Call Details

Fortinet will host a conference call today, April 26, 2016, at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to discuss its financial results. To access this call, dial (877) 303-6913 (domestic) or (224) 357-2188 (international) with conference ID # 82225827. A live webcast of the conference call and supplemental slides will be accessible from the Investor Relations page of Fortinet's website at http://investor.fortinet.com and a replay will be archived and accessible at http://investor.fortinet.com/events.cfm. A replay of this conference call can also be accessed through May 3, 2016, by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) with conference ID# 82225827.

Following Fortinet's financial results conference call, the Company will host an additional question-and-answer session at 3:30 p.m. Pacific Time (6:30 p.m. Eastern Time) to provide an opportunity for financial analysts and investors to ask more detailed questions. To access this call, dial (877) 303-6913 (domestic) or (224) 357-2188 (international) with conference ID # 82229345. This follow-up call will be webcast live and accessible at http://investor.fortinet.com, and a replay will be archived and available after the call at http://investor.fortinet.com/events.cfm. A replay of this conference call will also be available through May 3, 2016 by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) with conference ID # 82229345.

Fortinet FTNT, -1.09% protects the most valuable assets of some of the largest enterprise, service provider and government organizations across the globe. The company's fast, secure and global cyber security solutions provide broad, high-performance protection against dynamic security threats while simplifying the IT infrastructure. They are strengthened by the industry's highest level of threat research, intelligence and analytics. Unlike pure-play network security providers, Fortinet can solve organizations' most important security challenges, whether in networked, application or mobile environments - be it virtualized/cloud or physical. More than 270,000 customers worldwide, including some of the largest and most complex organizations, trust Fortinet to protect their brands. Learn more at www.fortinet.com, the Fortinet Blog or FortiGuard Labs.

# # #

Copyright © 2016 Fortinet, Inc. All rights reserved. The symbols ® and (TM) denote respectively federally registered trademarks and unregistered trademarks of Fortinet, Inc., its subsidiaries and affiliates. Fortinet's trademarks include, but are not limited to, the following: Fortinet, FortiGate, FortiGuard, FortiManager, FortiMail, FortiClient, FortiCloud, FortiCare, FortiAnalyzer, FortiReporter, FortiOS, FortiASIC, FortiWiFi, FortiSwitch, FortiVoIP, FortiBIOS, FortiLog, FortiResponse, FortiCarrier, FortiScan, FortiAP, FortiDB, FortiVoice and FortiWeb. Other trademarks belong to their respective owners.

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Forward-looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding market adoption of cybersecurity and Fortinet's future growth potential. 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. Important factors that could cause results to differ materially from the statements herein include the following: general economic risks; global economic conditions and foreign currency risks; increasing competitiveness in the security market; the dynamic nature of the security market; specific economic risks worldwide and in different geographies, and among different customer segments; uncertainty regarding increased business and renewals from existing customers; uncertainties around continued success in sales growth and market share gains; longer sales cycles, particularly for larger enterprise customers; failure to convert sales pipeline into final sales; risks associated with successful implementation of multiple integrated software products and other product functionality risks; execution risks around new product development and introductions, and innovation and market acceptance of new products; litigation and disputes and the potential cost, distraction and damage to sales and reputation caused thereby; 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; competition and pricing pressure; risks related to integrating acquisitions; 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 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 Generally Accepted Accounting Principles (GAAP). These non-GAAP financial 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...


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