FORTINET, INC. Q2 2021 Financial Results
July 29, 2021
Safe Harbor Statement
Information, statements and projections contained in these presentation slides and related conference call concerning Fortinet's business outlook, the third quarter and full year 2021 guidance, and future prospects and expectations are forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding demand for our products and services, guidance and expectations around future financial results, including guidance and expectations for the third quarter and full year 2021, statements regarding the momentum in our business and future growth expectations and objectives and statements regarding growth in market demand. Although we attempt to be accurate in making forward-looking statements, it is possible that future circumstances might differ from the assumptions on which such statements are based such that actual results are materially different from our forward-looking statements in these presentation slides. Important factors that could cause results to differ materially from the statements herein include the following: general economic risks, including those caused by the COVID-19 pandemic; negative impacts from the COVID-19 pandemic on sales, billings, revenue, demand and buying patterns, component supply and ability to manufacture products to meet demand in a timely fashion, and costs such as possible increased costs for shipping and components; global economic conditions, country-specific economic conditions, and foreign currency risks; competitiveness in the security market; the dynamic nature of the security market and its products and services; specific economic risks worldwide and in different geographies, and among different customer segments; uncertainty regarding demand and increased business and renewals from existing customers; uncertainties around continued success in sales growth and market share gains; actual or perceived vulnerabilities in our supply chain, products or services, and any actual or perceived breach of our network or our customers' networks; longer sales cycles, particularly for larger enterprise, service providers, government and other large organization customers; the effectiveness of our salesforce and failure to convert sales pipeline into final sales; risks associated with successful implementation of multiple integrated software products and other product functionality risks; risks associated with integrating acquisitions and changes in circumstances and plans associated therewith, including, among other risks, changes in plans related to product and services integrations, product and services plans and sales strategies; sales and marketing execution risks; execution risks around new product development and introductions and innovation; litigation and disputes and the potential cost, distraction and damage to sales and reputation caused thereby or by other factors; cybersecurity threats, breaches and other disruptions; market acceptance of new products and services; the ability to attract and retain personnel; changes in strategy; risks associated with management of growth; lengthy sales and implementation cycles, particularly in larger organizations; technological changes that make our products and services less competitive; risks associated with the adoption of, and demand for, our products and services in general and by specific customer segments, including those caused by the COVID-19 pandemic; competition and pricing pressure; product inventory shortages for any reason, including those caused by the COVID-19 pandemic; risks associated with business disruption caused by natural disasters and health emergencies such as earthquakes, fires, power outages, typhoons, floods, health epidemics and viruses such as the COVID-19 pandemic, and by manmade events such as civil unrest, labor disruption, international trade disputes, international conflicts, terrorism, wars, and critical infrastructure attacks; tariffs, trade disputes and other trade barriers, and negative impact on sales based on geo-political dynamics and disputes and protectionist policies; any political and government disruption around the world, including the impact of any future shutdowns of the U.S. government; and the other risk factors set forth from time to time in our most recent Annual Report on Form 10-K, our most recent Quarterly Report on Form 10-Q and our other filings with the Securities and Exchange Commission (SEC), copies of which are available free of charge at the SEC's website at www.sec.govor upon request from our investor relations department. All forward-looking statements herein reflect our opinions only as of the date of these presentation slides, and we undertake no obligation, and expressly disclaim any obligation, to update forward-looking statements herein in light of new information or future events.
Q2 2021 Non-GAAP Results
Q2'19 | Q3'19 | Q4'19 | Q1'20 | Q2'20 | Q3'20 | Q4'20 | Q1'21 | Q2'21 | |
Billings (1) | $622.4M | $626.6M | $802.3M | $667.8M | $711.5M | $749.8M | $960.9M | $850.6M | $960.9M |
Y/Y % Change | 21.2% | 18.8% | 23.6% | 21.1% | 14.3% | 19.7% | 19.8% | 27.4% | 35.1% |
Revenue | $523.8M | $548.1M | $618.1M | $577.7M | $617.6M | $651.1M | $748.0M | $710.3M | $801.1M |
Y/Y % Change | 18.4% | 20.9% | 21.3% | 22.1% | 17.9% | 18.8% | 21.0% | 23.0% | 29.7% |
Product Revenue | $189.9M | $197.1M | $238.8M | $192.3M | $211.9M | $223.8M | $288.4M | $240.7M | $298.3M |
Y/Y % Change | 14.2% | 19.8% | 18.9% | 18.2% | 11.6% | 13.5% | 20.8% | 25.2% | 40.8% |
Service Revenue | $333.9M | $351.0M | $379.3M | $385.4M | $405.7M | $427.3M | $459.6M | $469.6M | $502.8M |
Y/Y % Change | 20.9% | 21.5% | 22.9% | 24.2% | 21.5% | 21.7% | 21.2% | 21.8% | 23.9% |
Note
- Billings is a non-GAAP measure that we define as revenue recognized in accordance with GAAP plus the change in deferred revenue from the beginning to the end of the period less any deferred revenue balances acquired from business combination(s) during the period.
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Q2 2021 Non-GAAP Results (Continued)
Q2'19 | Q3'19 | Q4'19 | Q1'20 | Q2'20 | Q3'20 | Q4'20 | Q1'21 | Q2'21 | |
Gross Margin (1) | 76.5% | 78.2% | 78.1% | 78.8% | 79.1% | 79.5% | 78.5% | 78.9% | 77.5% |
Operating Income (1)(2) | $125.2M | $145.2M | $168.6M $129.2M $170.3M | $178.6M | $219.9M $173.9M | $203.3M | |||
Operating Margin (1)(2) | 23.9% | 26.5% | 27.3% | 22.4% | 27.6% | 27.4% | 29.4% | 24.5% | 25.4% |
Net Income (1)(2)(3)(4) | $103.2M | $117.3M | $135.1M | $105.1M | $136.6M | $145.4M | $175.5M | $135.6M | $158.7M |
Diluted Net Income Per Share(1)(2)(3)(4) | $0.59 | $0.67 | $0.77 | $0.60 | $0.83 | $0.88 | $1.06 | $0.81 | $0.95 |
Weighted Diluted Shares Outstanding | 175.1M | 174.8M | 175.2M | 174.2M | 165.4M | 165.6M | 165.5M | 166.4M | 167.1M |
Deferred Revenue | $1.84B | $1.92B | $2.11B | $2.20B | $2.29B | $2.39B | $2.61B | $2.75B | $2.91B |
Cash and Investments(5) | $1.98B | $2.14B | $2.21B | $1.57B | $1.63B | $1.77B | $1.96B | $3.09B | $3.36B |
Cash Paid for Stock Repurchases | $33.8M | $23.4M | $27.5M | $889.9M | $156.1M | - | $34.1M | - | $91.6M |
Days Sales Outstanding | 69 | 63 | 79 | 74 | 73 | 76 | 87 | 81 | 66 |
Inventory Turns | 3.5 | 2.8 | 2.8 | 2.5 | 2.2 | 2.1 | 2.7 | 2.1 | 2.7 |
Headcount | 6,293 | 6,590 | 7,082 | 7,448 | 7,756 | 8,075 | 8,238 | 8,615 | 9,043 |
Notes
- Excludes stock-based compensation and amortization of acquired intangible assets.
- Excludes gain on intellectual property ("IP") and litigation-related matters.
- Excludes gains/losses on investments in privately-held companies.
- Assumes a quarterly effective tax rate of 24% for Q2'19, Q3'19 and Q4'19. Assumes a quarterly effective tax rate of 22% for Q1'20 and Q2'20, a quarterly effective tax rate of 19% for Q3'20 and a quarterly effective tax rate of 21% for Q4'20. Assumes a quarterly effective tax rate of 21% for 2021.
- Excludes investments in privately held companies, which are recorded in other assets.
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Revenue by Geography
Q2'19 | Q3'19 | Q4'19 | Q1'20 | Q2'20 | Q3'20 | Q4'20 | Q1'21 | Q2'21 | ||||||||||
($ in millions) | $ | Y/Y % | $ | Y/Y % | $ | Y/Y % | $ | Y/Y % | $ | Y/Y % | $ | Y/Y % | $ | Y/Y % | $ | Y/Y % | $ | Y/Y % |
Change | Change | Change | Change | Change | Change | Change | Change | Change | ||||||||||
Americas | $226.4 | 19.3% | $241.0 | 24.3% | $252.2 | 23.1% | $242.6 | 20.9% | $261.0 | 15.3% | $272.4 | 13.0% | $301.3 | 19.5% | $290.9 | 19.9% | $337.0 | 29.1% |
EMEA | $192.8 | 17.0% | $200.9 | 21.6% | $245.4 | 19.8% | $221.0 | 24.6% | $229.2 | 18.9% | $243.3 | 21.1% | $298.3 | 21.6% | $275.7 | 24.8% | $306.2 | 33.6% |
APAC | $104.6 | 18.9% | $106.2 | 12.4% | $120.5 | 20.8% | $114.1 | 20.1% | $127.4 | 21.8% | $135.4 | 27.5% | $148.4 | 23.2% | $143.7 | 25.9% | $157.9 | 23.9% |
Total | $523.8 | 18.4% | $548.1 | 20.9% | $618.1 | 21.3% | $577.7 | 22.1% | $617.6 | 17.9% | $651.1 | 18.8% | $748.0 | 21.0% | $710.3 | 23.0% | $801.1 | 29.7% |
Q2'19 | Q3'19 | Q4'19 | Q1'20 | Q2'20 | Q3'20 | Q4'20 | Q1'21 | Q2'21 | |
% of revenue | % of revenue | % of revenue | % of revenue | % of revenue | % of revenue | % of revenue | % of revenue | % of revenue | |
Americas | 43.2% | 44.0% | 40.8% | 42.0% | 42.3% | 41.8% | 40.3% | 41.0% | 42.1% |
EMEA | 36.8% | 36.7% | 39.7% | 38.3% | 37.1% | 37.4% | 39.9% | 38.8% | 38.2% |
APAC | 20.0% | 19.3% | 19.5% | 19.7% | 20.6% | 20.8% | 19.8% | 20.2% | 19.7% |
Total | 100% | 100% | 100% | 100% | 100% | 100% | 100% | 100% | 100% |
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Fortinet Inc. published this content on 29 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 July 2021 20:18:08 UTC.
