Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-34511 ______________________________________ FORTINET, INC. (Exact name of registrant as specified in its cha ...

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Did you analyze how Fortinet (FTNT) fared in its international operations for the quarter ending March 2024? Given the widespread global presence of this network security company, scrutinizing the trends in international revenues becomes imperative to assess its financial strength and future growth possibilities.In the modern, closely-knit global economic landscape, the capacity of a business to access foreign markets is often a key determinant of its financial well-being and growth path. Investors now plac ...

SUNNYVALE, Calif., May 06, 2024 (GLOBE NEWSWIRE) -- RSA Conference 2024 Derek Manky, Chief Security Strategist and Global VP Threat Intelligence, FortiGuard Labs"The 2H 2023 Global Threat Landscape Report from FortiGuard Labs continues to shine a light on how quickly threat actors are taking advantage of newly disclosed vulnerabilities. In this climate, both vendors and customers have a role to play. Vendors must introduce robust security scrutiny at all stages of the product development life cycle and dedi ...

Financial Data and Key Metrics - Q1 2024 operating margin increased by 200 basis points to a record 28.5% [8] - Record cash flow from operations of $830 million, with an adjusted free cash flow margin of 61% [8] - Billings of $1.41 billion and revenue of $1.35 billion were within guidance ranges [14] - Free cash flow was $609 million, representing a 45% free cash flow margin [14] - Total revenue grew 7% to $1.35 billion, driven by service revenue growth of 24% to $944 million [20] - Product revenue decreased 18% to $409 million, impacted by backlog fulfillment in the prior year [20] - Total gross margin of 78.1%, up 180 basis points, with service gross margins at 87.9%, up 200 basis points [21] Business Line Data and Key Metrics - Unified SASE and SecOps accounted for one-third of Q1 billings, with unified SASE alone contributing 24% [8][9] - Existing customers delivered over 90% of SecOps and unified SASE billings, with large and mid-enterprises representing 78% and 84% of billings, respectively [15] - SMB was a top-performing customer segment, while international emerging markets were the best-performing geography [19] - Service provider and worldwide government experienced the highest growth, while retail and financial services were more challenged [19] Market Data and Key Metrics - International emerging markets were the best-performing geography [19] - The three largest industry verticals were worldwide government, service providers, and financial services [19] - Europe was slightly weaker in the quarter, particularly in the enterprise segment, which impacted billings performance [32] Company Strategy and Industry Competition - The company is focused on investing in the fast-growing unified SASE and SecOps markets, which combined accounted for one-third of Q1 billings [8] - Fortinet's unified SASE solution is differentiated by its integration into a single operating system (FortiOS) and its ability to be deployed on-premise or in the cloud [9][10] - The company is leveraging its FortiOS and FortiASIC technologies to gain market share in security networking, with large enterprises increasingly adopting its solutions [8] - Fortinet is recognized in five Gartner Magic Quadrants, including secure service edge, SD-WAN, and network firewall, all running on a single operating system [10] Management Commentary on Operating Environment and Future Outlook - Management noted that high interest rates are causing enterprises to favor OpEx over CapEx for networking security projects, leading to a shift in focus towards SASE and SecOps [34] - The company expects the firewall digestion cycle to be completed by the second half of 2024, with signs of a more normalized firewall market emerging [27] - Fortinet is optimistic about its pipeline growth, particularly in SASE and SecOps, with pipeline growth of 30% for SecOps and over 45% for unified SASE [15] Other Important Information - The company announced the industry-first IoT security generative AI assistant, FortiAI, which supports 30-plus languages [11] - Fortinet launched the FortiGate 200G, a mid-range firewall powered by a new SD FortiASIC, offering 3 to 10 times the performance of competitors [12] - The company has a remaining share buyback authorization of $1 billion, with $5.3 billion repurchased over the past four-plus years [22] Q&A Session Summary Question: What drove the billings performance in Q1, and what gives confidence in the guidance for the back half of the year? - Billings were slightly weaker due to softness in Europe, but the pipeline and hygiene improvements give confidence in the full-year outlook [32] - High interest rates are causing enterprises to favor OpEx over CapEx, leading to a shift towards SASE and SecOps [34] Question: How does the company think about pricing strategy and discounting for cross-selling? - The company maintains a consistent pricing strategy, focusing on healthy margins for both the company and its partners [37] - Pricing adjustments were made to reflect pre-pandemic levels after supply chain costs normalized [37] Question: Can you provide more color on SASE traction and customer segmentation? - Existing customers accounted for over 90% of SASE and SecOps billings, with large and mid-enterprises dominating [39] - 81% of unified SASE billings came from existing SD-WAN customers [42] Question: Can you elaborate on geographic performance and pipeline growth for secure SD-WAN? - SMBs performed strongly, while Europe was slightly weaker in the enterprise segment [46] - The pipeline for secure SD-WAN is growing, with large enterprises showing strong interest [48] Question: What are the signs of recovery in the firewall market, and how does it impact market share? - The firewall market is showing signs of recovery, with customers completing the inventory digestion process [55] - Fortinet continues to gain market share due to its strong performance and differentiated offerings [54] Question: How should we think about the refresh cycle for firewall appliances? - The refresh cycle is expected to begin as customers complete the digestion process and look to upgrade to newer, more efficient products [67] - New areas like OT and IoT security are driving growth, with customers increasingly adopting Fortinet's solutions [68] Question: What is the approach to share buybacks and M&A? - The company remains opportunistic with share buybacks, having repurchased $5.3 billion over the past four-plus years [75] - M&A is considered strategically, with a focus on tech and talent tuck-ins [76] Question: Can you provide an update on headcount plans and OpEx? - The company continues to invest in R&D and field sales engineering while maintaining a balanced approach to hiring [80] - The shift towards higher-margin services is making margin targets more achievable [81] Question: How is the receivables drawdown and DSO performance being managed? - DSOs improved due to the timing of large deals, with one eight-figure deal closing earlier in the quarter compared to six in Q4 2023 [84] Question: How is the partner community managing the CapEx to OpEx shift? - Large distributors and resellers are offering financing programs, with Fortinet providing extended payment options for larger deals [86] Question: Can you discuss the enterprise agreement strategy and go-to-market efforts? - Enterprise agreements are growing, particularly with larger customers looking for long-term relationships and product consolidation [89] - The FortiPoints program has been well-received, driving customer engagement [90] Question: How is FortiAI being monetized, and what is the impact on gross margins? - FortiAI is being charged separately and is additive to existing products, with early interest from customers [102] - The impact on gross margins is still in the early stages, with material benefits expected in the future [101]

Q1 2024 Financial Results May 2, 2024 Safe Harbor Statement Information, statements and projections contained in these presentation slides and related conference call concerning Fortinet’s business outlook, the second quarter and full year 2024 guidance, and future prospects and expectations are forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding any indications related to future growth and market share gains, our strategy going forw ...

Press Release Fortinet Reports First Quarter 2024 Financial Results First Quarter 2024 Highlights • Total revenue of $1.35 billion, up 7% year over year • Service revenue of $944 million, up 24% year over year • GAAP operating margin of 23.7% • Non-GAAP operating margin of 28.5%1 • Cash flow from operations of $830 million • Free cash flow of $609 million1 SUNNYVALE, Calif. - May 2, 2024 - Fortinet® (Nasdaq: FTNT), a global cybersecurity leader driving the convergence of networking and security, today annou ...

SUNNYVALE, Calif., May 02, 2024 (GLOBE NEWSWIRE) -- John Maddison, Chief Marketing Officer at Fortinet "Generative AI is reshaping network and security operations, supporting IT and cyber professionals to do more, faster. Fortinet is committed to remaining at the forefront of AI innovation, and by expanding FortiAI, our context-aware GenAI assistant, we're continuing to empower operations teams with advanced natural language processing capabilities. The latest updates to FortiAI deliver innovative new ways ...

SUNNYVALE, Calif., May 02, 2024 (GLOBE NEWSWIRE) -- John Maddison, Chief Marketing Officer at Fortinet "Networks are growing in complexity and scope, and they require high performance and advanced security at the edge. We designed the FortiGate 200G series to serve as a new approach for perimeter security with the computing power and AI-enhanced protections enterprises need within the campus. Built on our latest proprietary ASIC, the SP5, this new next-gen firewall will empower customers to meet evolving b ...

The Zacks Internet Software industry is anticipated to have witnessed a steady performance in the first quarter of 2024, driven by continued demand for digital transformation and the increasing need for remote working amid heightened geopolitical risks, rising inflation and high interest rates.The rapid adoption of Software-as-a-Service (SaaS) models and the increasing need to secure cloud platforms amid the increasing incidences of cyber-attacks have accelerated demand for software solutions. The demand fo ...