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Fortinet Reports Strong Third Quarter 2015 Financial Results

September 30, 2015

“For the third consecutive quarter this year, Fortinet accelerated billings growth to record levels, delivering 41% billings growth - the highest ever as a public company,” said Ken Xie, founder, chairman and chief executive officer. “Additionally, we delivered non-GAAP operating margin and earnings per share upside to shareholders. We are executing well and our investment strategy is working. Fortinet remains well-positioned to gain market share globally due to our strong competitive technology position and best-in-class end-to-end network security solutions portfolio, as well as the ongoing success of our land and expand strategy.”

Financial Highlights for the Third Quarter of 2015

Total billings were

quarter of 2015, an increase of

compared to

$213.2 million

in the same quarter of 2014.

Revenue:

Total revenue was

$193.3 million

in the same quarter of 2014. Within total revenue, product revenue was

$119.7 million

$87.7 million

in the same quarter of 2014. Service revenue was

$140.3 million

$105.6 million

Deferred Revenue:

Total deferred revenue was

as of

$49.4 million

$657.6 million

as of June 30, 2015.

Cash and Cash Flow

As of

, cash, cash equivalents and investments were

, compared to

$1.15 billion

as of June 30, 2015. In the

quarter of 2015, cash flow from operations was

$56.5 million

in the same quarter of 2014. Free cash flow

during the

quarter of 2015 compared to

$50.7 million

GAAP Operating Income or Loss:

GAAP operating loss was

$1.8 million

quarter of 2015, representing a GAAP operating margin of

. GAAP operating income was

$15.5 million

for the same quarter of 2014, representing a GAAP operating margin of

GAAP Net Income and Diluted Net Income Per Share:

GAAP net income was

$8.2 million

quarter of 2015, compared to GAAP net income of

$4.1 million

for the same quarter of 2014. GAAP diluted net income per share was

Non-GAAP operating income was

$36.4 million

quarter of 2015, representing a non-GAAP operating margin of

. Non-GAAP operating income was

$30.4 million

for the same quarter of 2014, representing a non-GAAP operating margin of

Non-GAAP net income was

$24.1 million

quarter of 2015, compared to non-GAAP net income of

$20.0 million

for the same quarter of 2014. Non-GAAP diluted net income per share was

for the third quarter of 2015, compared to $0.12 for the same quarter of 2014.

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.”

During the

quarter of 2015, there were no shares repurchased under our share repurchase program.

Conference Call Details

Fortinet will host a conference call today, October 22, 2015, 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 # 55728223. 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 October 29, 2015, by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) with conference ID# 55728223.

Following the financial results conference call, Fortinet 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 product and financial questions. To access this call, dial (877) 303-6913 (domestic) or (224) 357-2188 (international) with conference ID # 55732708. This follow-up call will be webcast live and accessible at

, and a replay will be archived and available after the call at

. A replay of this conference call will also be available through October 29, 2015 by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) with conference ID # 55732708.

About Fortinet

www.fortinet.com

Fortinet (NASDAQ: FTNT) 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 200,000 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 © 2015 Fortinet, Inc. All rights reserved. The symbols ® and ™ 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.

FTNT-F

Forward-looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding the momentum in our business, potential growth of our business and market share gains. 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; increasing competitiveness in the security market; the dynamic nature of the security market; specific economic risks in different geographies, and among different customer segments; changes in foreign currency exchange rates; uncertainty regarding increased business and renewals from existing customers; uncertainties around continued success in sales growth and market share gains; 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; sales execution risks; product defects;...


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