Fortinet reports second quarter 2021 financial results

• Total revenue of $801.1 million, up 30% year over year
• Product revenue of $298.3 million, up 41% year over year
• Service revenue of $502.8 million, up 24% year over year
• Billings of $960.9 million, up 35% year over year1
• Deferred revenue of $2.91 billion, up 27% year over year
• GAAP operating margin of 18.4%
• Non-GAAP operating margin of 25.4%1
• GAAP diluted net income per share of $0.82
• Non-GAAP diluted net income per share of $0.951
• Cash flow from operations of $418.2 million
• Free cash flow of $394.7 million, a Fortinet quarterly record1

SUNNYVALE, Calif., July 29, 2021 (GLOBE NEWSWIRE) -- Fortinet® (Nasdaq: FTNT), a global leader in broad, integrated and automated cybersecurity solutions, today announced financial results for the second quarter ended June 30, 2021.

“We delivered our highest quarterly billings growth in over five years, led by the Americas and EMEA regions, while continuing to invest across our product portfolio,” said Ken Xie, Founder, Chairman, and Chief Executive Officer. “Fortinet’s customers are seeing the value in our holistic platform approach, which delivers integrated and automated security across a company’s on-premise network, endpoints, and cloud edges. We are pleased with our strong business momentum heading into the second half of the year and are delighted to once again raise full-year revenue and billings guidance.”

Financial Highlights for the Second Quarter of 2021

• Revenue: Total revenue was $801.1 million for the second quarter of 2021, an increase of 29.7% compared to $617.6 million for the same quarter of 2020.
   
• Product Revenue: Product revenue was $298.3 million for the second quarter of 2021, an increase of 40.8% compared to $211.9 million for the same quarter of 2020.
   
• Service Revenue: Service revenue was $502.8 million for the second quarter of 2021, an increase of 23.9% compared to $405.7 million for the same quarter of 2020.
   
• Billings1: Total billings were $960.9 million for the second quarter of 2021, an increase of 35.1% compared to $711.5 million for the same quarter of 2020.
   
• Deferred Revenue: Total deferred revenue was $2.91 billion as of June 30, 2021, an increase of 26.7% compared to $2.29 billion as of June 30, 2020.
   
• GAAP Operating Income and Margin: GAAP operating income was $147.5 million for the second quarter of 2021, representing a GAAP operating margin of 18.4%. GAAP operating income was $118.8 million for the same quarter of 2020, representing a GAAP operating margin of 19.2%.
   
• Non-GAAP Operating Income and Margin1: Non-GAAP operating income was $203.3 million for the second quarter of 2021, representing a non-GAAP operating margin of 25.4%. Non-GAAP operating income was $170.3 million for the same quarter of 2020, representing a non-GAAP operating margin of 27.6%.
   
• GAAP Net Income and Diluted Net Income Per Share: GAAP net income was $137.5 million for the second quarter of 2021, compared to GAAP net income of $113.8 million for the same quarter of 2020. GAAP diluted net income per share was $0.82 for the second quarter of 2021, based on 167.1 million diluted weighted-average shares outstanding, compared to GAAP diluted net income per share of $0.69 for the same quarter of 2020, based on 165.4 million diluted weighted-average shares outstanding.
   
• Non-GAAP Net Income and Diluted Net Income Per Share1: Non-GAAP net income was $158.7 million for the second quarter of 2021, compared to non-GAAP net income of $136.6 million for the same quarter of 2020. Non-GAAP diluted net income per share was $0.95 for the second quarter of 2021, based on 167.1 million diluted weighted-average shares outstanding, compared to $0.83 for the same quarter of 2020, based on 165.4 million diluted weighted-average shares outstanding.
   
• Cash Flow: Cash flow from operations was $418.2 million for the second quarter of 2021, compared to $247.0 million for the same quarter of 2020.
   
• Free Cash Flow1: Free cash flow was $394.7 million for the second quarter of 2021, compared to $216.1 million for the same quarter of 2020.

Guidance

For the third quarter of 2021, Fortinet currently expects:

• Revenue in the range of $800 million to $815 million
• Billings in the range of $940 million to $960 million
• Non-GAAP gross margin in the range of 77.5% to 78.5%
• Non-GAAP operating margin in the range of 24.5% to 25.5%
• Diluted non-GAAP net income per share in the range of $0.90 to $0.95, assuming a non-GAAP effective tax rate of 21%. This assumes a diluted share count of 169 million to 171 million.

For the fiscal year 2021, Fortinet currently expects:

• Revenue in the range of $3.210 billion to $3.250 billion
• Service revenue in the range of $2.045 billion to $2.075 billion
• Billings in the range of $3.870 billion to $3.920 billion
• Non-GAAP gross margin in the range of 77.0% to 79.0%
• Non-GAAP operating margin in the range of 25.0% to 27.0%
• Diluted non-GAAP net income per share in the range of $3.75 to $3.90, assuming a non-GAAP effective tax rate of 21%. This assumes a diluted share count of 168 million to 170 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, amortization of acquired intangible assets and gain on intellectual property matter. 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 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”.