Fortinet Reports Second Quarter 2024 Financial Results

• Record quarterly GAAP and Non-GAAP operating margins
• Raises 2024 revenue and Non-GAAP operating margin guidance
• Continuing to invest in the fast-growing Unified SASE and Security Operations markets

Second Quarter 2024 Highlights

• Total revenue of $1.43 billion, up 11% year over year
• Service revenue of $982 million, up 20% year over year
• Record GAAP operating margin of 30.5%
• Record Non-GAAP operating margin of 35.1%1
• Cash flow from operations of $342 million
• Fortinet® (Nasdaq: FTNT), a global cybersecurity leader driving the convergence of networking and security, has announced financial results for the second quarter ended June 30, 2024.

"In the second quarter, we successfully balanced growth and profitability as our non-GAAP operating margin increased 820 basis points year-over-year to a company record of 35.1%1, while billings and revenue were at the high end of their respective guidance ranges," said Ken Xie, Founder, Chairman and Chief Executive Officer of Fortinet. "We are continuing to execute our strategy to invest in the fast-growing Unified SASE and Security Operations markets, while gaining market share in Secure Networking. We expect to emerge as a SASE leader, as we are the only vendor in the Gartner Magic Quadrant™ for Single-Vendor SASE that is also recognized in five different network security Magic Quadrant™ reports.2"

Financial Highlights for the Second Quarter of 2024

•       Revenue: Total revenue was $1.43 billion for the second quarter of 2024, an increase of 10.9% compared to $1.29 billion for the same quarter of 2023.

•       Product Revenue: Product revenue was $451.9 million for the second quarter of 2024, a decrease of 4.4% compared to $472.6 million for the same quarter of 2023.

•       Service Revenue: Service revenue was $982.4 million for the second quarter of 2024, an increase of 19.8% compared to $820.2 million for the same quarter of 2023.

•       Billings1: Total billings were $1.54 billion for the second quarter of 2024, remaining flat compared to $1.54 billion for the same quarter of 2023.

•       Deferred Revenue: Total deferred revenue was $5.90 billion as of June 30, 2024, an increase of 15.0% compared to $5.13 billion as of June 30, 2023.

•       GAAP Operating Income and Margin: GAAP operating income was $437.2 million for the second quarter of 2024, representing a GAAP operating margin of 30.5%. GAAP operating income was $279.0 million for the same quarter of 2023, representing a GAAP operating margin of 21.6%.

•       Non-GAAP Operating Income and Margin1: Non-GAAP operating income was $503.6 million for the second quarter of 2024, representing a non-GAAP operating margin of 35.1%. Non-GAAP operating income was $348.1 million for the same quarter of 2023, representing a non-GAAP operating margin of 26.9%.

•       GAAP Net Income and Diluted Net Income Per Share: GAAP net income was $379.8 million for the second quarter of 2024, compared to GAAP net income of $266.3 million for the same quarter of 2023. GAAP diluted net income per share was $0.49 for the second quarter of 2024, based on 769.9 million diluted weighted-average shares outstanding, compared to GAAP diluted net income per share of $0.33 for the same quarter of 2023, based on 795.9 million diluted weighted-average shares outstanding.

•       Non-GAAP Net Income and Diluted Net Income Per Share1: Non-GAAP net income was $439.9 million for the second quarter of 2024, compared to non-GAAP net income of $300.4 million for the same quarter of 2023. Non-GAAP diluted net income per share was $0.57 for the second quarter of 2024, based on 769.9 million diluted weighted-average shares outstanding, compared to $0.38 for the same quarter of 2023, based on 795.9 million diluted weighted-average shares outstanding.

•       Cash Flow: Cash flow from operations was $342.0 million for the second quarter of 2024, compared to $515.1 million for the same quarter of 2023.

•       Free Cash Flow1: Free cash flow was $318.9 million for the second quarter of 2024, compared to $438.3 million for the same quarter of 2023.