Home Finance Fortinet Reports Second Quarter 2022 Financial Results 
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Fortinet Reports Second Quarter 2022 Financial Results 

Second Quarter 2022 Highlights

by uma

 

 

  • Product revenue of $400.7 million, up 34% year over year
  • Total revenue of $1.03 billion, up 29% year over year
  • Bookings of $1.38 billion, up 42% year over year1
  • Billings of $1.30 billion, up 36% year over year2
  • Deferred revenue of $3.93 billion, up 35% year over year
  • GAAP operating margin of 19.0%
  • Non-GAAP operating margin of 24.8%2
  • GAAP diluted net income per share attributable to Fortinet, Inc. of $0.213
  • Non-GAAP diluted net income per share attributable to Fortinet, Inc. of $0.242,3
  • Cash flow from operations of $323.4 million
  • Free cash flow of $283.5 million2
  • Cash paid for share repurchases of $800.0 million 

London – 4th August, 2022 – Fortinet® (Nasdaq: FTNT), a global leader in broad, integrated and automated cybersecurity solutions, today announced financial results for the second quarter ended June 30, 2022.

“We delivered strong revenue and billings growth in the second quarter driven by an over 50% year-over-year increase in the number of transactions larger than one million dollars. Large enterprise companies continue to favour Fortinet’s industry leading cost for performance advantage and integrated platform strategy,” said Ken Xie, Founder, Chairman, and Chief Executive Officer. “Fortinet’s market share gains are being driven by the convergence of networking and security and an accelerating focus on vendor consolidation with our Core Platform and Platform Extension solutions designed to secure our customers’ entire infrastructure from the data centre to the cloud.”

Financial Highlights for the Second Quarter of 2022

  • Revenue: Total revenue was $1.03 billion for the second quarter of 2022, an increase of 28.6% compared to $801.1 million for the same quarter of 2021. 
  • Product Revenue: Product revenue was $400.7 million for the second quarter of 2022, an increase of 34.3% compared to $298.3 million for the same quarter of 2021.
  • Service Revenue: Service revenue was $629.4 million for the second quarter of 2022, an increase of 25.2% compared to $502.8 million for the same quarter of 2021.
  • Bookings1: Total bookings were $1.38 billion for the second quarter of 2022, an increase of 42.1% compared to $967.9 million for the same quarter of 2021. Backlog was $349.9 million as of June 30, 2022, an increase of $188.0 million compared to $161.9 million as of December 31, 2021.
  • Billings2: Total billings were $1.30 billion for the second quarter of 2022, an increase of 35.7% compared to $960.9 million for the same quarter of 2021.
  • Deferred Revenue: Total deferred revenue was $3.93 billion as of June 30, 2022, an increase of 35.3% compared to $2.91 billion as of June 30, 2021. 
  • GAAP Operating Income and Margin: GAAP operating income was $195.3 million for the second quarter of 2022, representing a GAAP operating margin of 19.0%. GAAP operating income was $147.5 million for the same quarter of 2021, representing a GAAP operating margin of 18.4%.
  • Non-GAAP Operating Income and Margin2: Non-GAAP operating income was $255.4 million for the second quarter of 2022, representing a non-GAAP operating margin of 24.8%. Non-GAAP operating income was $203.3 million for the same quarter of 2021, representing a non-GAAP operating margin of 25.4%.
  • GAAP Net Income and Diluted Net Income Per Share Attributable to Fortinet, Inc.3: GAAP net income was $173.5 million for the second quarter of 2022, compared to GAAP net income of $137.5 million for the same quarter of 2021. GAAP diluted net income per share was $0.21 for the second quarter of 2022, based on 810.1 million diluted weighted-average shares outstanding, compared to GAAP diluted net income per share of $0.16 for the same quarter of 2021, based on 835.4 million diluted weighted-average shares outstanding.
  • Non-GAAP Net Income and Diluted Net Income Per Share Attributable to Fortinet, Inc.2,3: Non-GAAP net income was $194.1 million for the second quarter of 2022, compared to non-GAAP net income of $158.7 million for the same quarter of 2021. Non-GAAP diluted net income per share was $0.24 for the second quarter of 2022, based on 810.1 million diluted weighted-average shares outstanding, compared to $0.19 for the same quarter of 2021, based on 835.4 million diluted weighted-average shares outstanding.
  • Cash Flow: Cash flow from operations was $323.4 million for the second quarter of 2022, compared to $418.2 million for the same quarter of 2021. 
  • Free Cash Flow2: Free cash flow was $283.5 million for the second quarter of 2022, compared to $394.7 million for the same quarter of 2021.
  • Share Repurchase Programme3: During the three and six months ended June 30, 2022, Fortinet repurchased 14.4 million and 25.8 million shares of its common stock at an average price of  $55.45 and $57.82 per share and for an aggregate purchase price of   $800.0 million and $1.49 billion, respectively. During the three and six months ended June 30, 2021, Fortinet repurchased 2.3 million shares of its common stock at an average price of $40.28 per share and for an aggregate purchase price of $91.6 million. In July 2022, Fortinet’s board of directors authorised a $1.0 billion increase in the authorised stock repurchase under our share repurchase programme. As of August 1, 2022, approximately $1.03 billion remained available for future share repurchases.

Guidance

For the third quarter of 2022, Fortinet currently expects:

  • Revenue in the range of $1.105 billion to $1.135 billion
  • Billings in the range of $1.385 billion to $1.415 billion
  • Non-GAAP gross margin in the range of 75.0% to 76.0%
  • Non-GAAP operating margin in the range of 25.0% to 26.0%
  • Diluted non-GAAP net income per share attributable to Fortinet, Inc. in the range of $0.26 to $0.28, assuming a non-GAAP effective tax rate of 17%. This assumes a diluted share count of 810 million to 820 million.

For the fiscal year 2022, Fortinet currently expects:

  • Revenue in the range of $4.350 billion to $4.400 billion
  • Service revenue in the range of $2.620 billion to $2.670 billion
  • Billings in the range of $5.560 billion to $5.640 billion
  • Non-GAAP gross margin in the range of 75.0% to 76.0%
  • Non-GAAP operating margin in the range of 25.0% to 26.0%
  • Diluted non-GAAP net income per share attributable to Fortinet, Inc. in the range of $1.01 to $1.06, assuming a non-GAAP effective tax rate of 17%. This assumes a diluted share count of 810 million to 820 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, amortisation 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 Bookings represents the total value of all orders received during the period. Backlog represents orders received but not fulfilled and excludes Alaxala Networks Corporation. When an order is fulfilled, billings and revenue are recognised.

2 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”.

3 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.

 

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