Financial Data and Key Metrics Changes - The company reported a revenue growth of 14%, reaching $1,540,000,000, with product revenue increasing by 12% to $459,000,000 [14][15] - Total billings grew 14% to $1,600,000,000, driven by 18% growth in unified SaaS and 29% growth in AI-driven SecOps [14][15] - The operating margin reached a record 34%, exceeding the high end of guidance by 320 basis points [17][31] - Free cash flow was a record $783,000,000, representing a margin of 51% [17] Business Line Data and Key Metrics Changes - Unified SaaS billing growth was 18%, accounting for 25% of total business, while secure operations and unified SaaS saw strong growth with security service edge billing growth over 110% [7][14] - Security subscriptions revenue increased by 16%, while support and related service revenues grew by 12% [15][16] - AI-driven security operations accounted for 10% of the business, with a 29% increase in revenue [9][10] Market Data and Key Metrics Changes - EMEA was the best-performing geography with mid-teens growth, particularly in financial services and government sectors, which grew over 20% [24][25][101] - The number of new logos increased by 14% to over 6,300, driven by investments in channel partners [14][15] Company Strategy and Development Direction - The company aims to become the number one player in the SASE market, leveraging its strong SASE strategy and unified operating system [19][20] - Continued investment in AI capabilities is expected to drive growth, with over 500 issued and pending AI patents [10] - The company is focusing on expanding its offerings in OT security and AI as key growth drivers over the next five years [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for cybersecurity solutions despite geopolitical uncertainties, with a growing pipeline and robust close rates [26][27] - The company is maintaining its full-year guidance to account for potential top-line risks associated with the evolving geopolitical environment [29][31] - The management noted that the firewall upgrade cycle is expected to gain momentum in the second half of 2025 [30] Other Important Information - The company announced a transition in CFO roles, with Keith Jensen stepping down and Christiana Ohlgart taking over [3][4] - The company has not seen significant impacts from U.S. tariffs in Q1 and does not expect meaningful impacts in Q2 [27][73] Q&A Session Summary Question: Dynamics behind maintenance and services revenue - Management explained that the slight decline was affected by Q4 having two more days than Q1, impacting daily revenue rates [38][39] Question: Guidance for the next quarter - Management indicated that while there is good momentum, they are being cautious due to geopolitical uncertainties [46][47] Question: Customer hesitancy in purchasing - Management noted that while there is hesitancy, they have not seen delays yet, and positive feedback from channel activities is expected to resolve this [54][55] Question: Large transactions and their drivers - Management confirmed that large transactions are primarily driven by SD WAN deployments, with customers buying additional solutions [67] Question: Impact of tariffs on margins - Management stated that they do not expect significant impacts from tariffs in Q1 or Q2, as only a few products are subject to tariffs [73][75] Question: Changes in channel partner behavior ahead of tariffs - Management reported no specific acceleration of deals due to tariffs, although there were inquiries about potential price increases [77][79] Question: Upcoming refresh cycle assumptions - Management indicated that smaller customers are buying more, while larger customers' strategies vary based on consolidation or upgrading [119][120]

Financial Data and Key Metrics Changes - Fortinet reported a revenue growth of 14% year-over-year, reaching $1,540,000,000 in Q1 2025, with product revenue increasing by 12% to $459,000,000 [12][14] - The operating margin reached a record 34%, reflecting strong gross margins and cost efficiencies [16][30] - Free cash flow was a record $783,000,000, with a margin of 51%, up six points from the previous year [16] Business Line Data and Key Metrics Changes - Unified SaaS billing grew by 18%, driven by a 110% increase in security service edge billing, accounting for 25% of the business [6][13] - AI-driven security operations revenue increased by 29%, representing 10% of total business [9][10] - Security subscriptions revenue grew by 16%, while support and related service revenues increased by 12% [15] Market Data and Key Metrics Changes - EMEA was the best-performing geography with mid-teens growth, particularly in financial services and government sectors, which grew over 20% [24][95] - The number of new logos increased by 14% to over 6,300, driven by investments in channel partners [13][14] - Large enterprise customers showed a growth of around 30%, with an increase in deals greater than $1,000,000 [23] Company Strategy and Development Direction - Fortinet aims to maintain its leadership in the firewall market and expand its presence in the SASE and OT security markets [6][10] - The company is focusing on integrating AI capabilities into its products, holding over 500 AI patents, and enhancing its SASE strategy [10][11] - Fortinet is also investing in Sovereign SASE solutions for large enterprises and service providers, ensuring compliance with local regulations [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued adoption of Fortinet solutions despite macroeconomic uncertainties, citing strong customer demand [18][25] - The company is cautious in its guidance due to potential risks from geopolitical factors but remains optimistic about achieving growth targets [28][30] - The upcoming firewall upgrade cycle is expected to gain momentum in the second half of 2025 [29] Other Important Information - The company announced the FortiGate 700 series, a high-performance firewall aimed at mid-sized businesses, which is expected to enhance market share [11] - Infrastructure investments decreased to $67,000,000, reflecting a lower level of real estate investment [17] Q&A Session Summary Question: Dynamics behind maintenance and services revenue - Management explained that the slight decline in service revenue was affected by fewer days in Q1 compared to Q4, impacting daily revenue rates [36][38] Question: Lightness in guidance for the next quarter - Management acknowledged some uncertainty in customer purchasing decisions due to geopolitical factors but noted strong close rates and sales momentum [44][45] Question: Conversations with customers regarding hesitancy to commit - Management indicated that while there is hesitancy due to macro news, they have not seen delays in deals yet [50][51] Question: Impact of tariffs on hardware sales - Management stated that tariffs are not expected to have a significant impact on operating margins, as only a few components are subject to tariff charges [68][70] Question: Large transactions and their representation of the Fortinet platform - Management confirmed that large transactions are primarily driven by SD WAN deployments, with customers expanding into the Fortinet security fabric [63][64] Question: Service revenue downtick and customer refresh dynamics - Management noted that the service revenue decline was partly due to customers refreshing appliances without adding new subscriptions [84][91]