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Fortinet Reports Fourth Quarter and Full Year 2017 Financial Results

Thursday, February 15, 2018/ Editor -  

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Fortinet Reports Full Year Revenue Up 17% and Billings Up 19% over 2016

Fourth Quarter 2017 Highlights

• Revenue of $416.7 million, up 15% year over year

• Billings of $534.0 million, up 15% year over year1

• Deferred revenue of $1.34 billion, up 29% year over year

• GAAP diluted net loss per share of $0.17, including the impact of a one-time tax expense of $63.0 million, or $0.36 per share, related to new tax legislation

• Non-GAAP diluted net income per share of $0.321

• Cash flow from operations of $157.5 million

• Free cash flow of $143.9 million1

• Cash, cash equivalents and investments of $1.35 billion

• $322.4 million in share repurchases

Full Year 2017 Highlights

• Revenue of $1.49 billion, up 17% year over prior year

• Billings of $1.80 billion, up 19% year over prior year1

• GAAP diluted net income per share of $0.18, including the impact of a one-time tax expense of $63.0 million, or $0.35 per share, related to new tax legislation

• Non-GAAP diluted net income per share grew 42% year over year to $1.041

• Cash flow from operations of $594.4 million

• Free cash flow grew 65% year over year to $459.1 million1

• $446.3 million in share repurchases

Dubai, UAE. - February 15, 2018 - Fortinet® (NASDAQ: FTNT), a global leader in broad, automated, and integrated cyber security solutions, today announced financial results for the fourth quarter and full year ended December 31, 2017.

“We are pleased with our strong fourth quarter and full year results, which demonstrate our clear technology advantage and market leadership,” said Ken Xie, Founder, Chairman and Chief Executive Officer. “Our ability to provide our customers with broad, integrated and automated security across the entire network infrastructure sets us apart from our competition. Led by the innovation of the Fortinet Security Fabric, Fortinet has strong market momentum and is well positioned for robust future growth.”

Financial Highlights for the Full Year 2017

• Revenue: Total revenue was $1.49 billion for 2017, an increase of 17% compared to $1.28 billion in 2016.

• Product revenue was $577.2 million for 2017, an increase of 5% compared to $548.1 million in 2016. Service revenue was $917.8 million for 2017, an increase of 26% compared to $727.3 million in 2016.

• Billings1: Total billings were $1.80 billion for 2017, an increase of 19% compared to $1.52 billion in 2016.

• GAAP Operating Income and Margin: GAAP operating income was $109.8 million for 2017, representing a GAAP operating margin of 7%. GAAP operating income was $42.9 million for 2016, representing a GAAP operating margin of 3%. 

• Non-GAAP Operating Income1 and Margin1: Non-GAAP operating income was $257.4 million for 2017, representing a non-GAAP operating margin of 17%. Non-GAAP operating income was $193.1 million for 2016, representing a non-GAAP operating margin of 15%. 

• GAAP Net Income and Diluted Net Income Per Share: GAAP net income was $31.4 million for 2017, compared to GAAP net income of $32.2 million for 2016. GAAP diluted net income per share was $0.18 for 2017, based on 178.1 million diluted weighted-average shares outstanding, compared to GAAP diluted net income per share of $0.18 for 2016, based on 176.3 million diluted weighted-average shares outstanding.

• Impact of New Tax Legislation: Net income for 2017 was impacted by a one-time tax expense of $63.0 million, or $0.35 per share, resulting from the Act. The effective GAAP tax rate was 75% in 2017, up from the 25% rate in 2016, reflecting the impact of the Act. Excluding the impact of the Act, the effective income tax rate for 2017 was 24%.

• Non-GAAP Net Income1 and Diluted Net Income Per Share1: Non-GAAP net income was $184.7 million for 2017, compared to non-GAAP net income of $129.5 million for 2016.  Non-GAAP diluted net income per share was $1.04 for 2017, based on 178.1 million diluted weighted-average shares outstanding, compared to $0.73, based on 176.3 million diluted weighted-average shares outstanding, for 2016. Non-GAAP effective tax rate remained at 32% in 2017 and was not impacted by the Act.

• Cash Flow and Free Cash Flow1: In 2017, cash flow from operations was $594.4 million compared to $345.7 million in 2016. Free cash flow1 was $459.1 million in 2017 compared to $278.5 million in 2016. In 2017, Fortinet used $107.2 million for real estate purchases for its Canada and Sunnyvale offices.

• Share Repurchase: During 2017, Fortinet repurchased 11.2 million shares of its common stock for a total purchase price of $446.3 million. During 2016, Fortinet repurchased 3.9 million shares of its common stock for a total purchase price of $110.8 million.


Keith Jensen Named Interim Chief Financial Officer - Effective February 16, 2018

Keith Jensen, a 35-year finance veteran and Fortinet’s chief accounting officer since May 2014, will succeed CFO Drew Del Matto as interim CFO effective February 16, 2018. Keith served as chief administrative officer and chief accounting officer (CAO) at DataDirect Networks and CAO at Sybase. Before Sybase, Keith was chief financial officer of Dorado Network Systems.

“The past four years have been incredibly rewarding and I am honored to have worked with Ken, Michael and the rest of the Fortinet team. I will miss them all and I am excited that Keith is taking over the interim CFO role,' said Drew Del Matto, who is leaving for another opportunity.  “Over the last four years, Drew has made a strong impact on the business and significantly contributed to the company’s growth and profitability. During that time Drew has developed a deep bench of seasoned leaders and has built a strong financial organization to support and grow the business. We wish Drew the very best in his next opportunity and we thank him for his significant contributions,' said Ken Xie.

 


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