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Fortinet reports first quarter 2021 financial results

First quarter 2021 highlights 

  • Total revenue of US$710.3 million, up 23 per cent year over year 
  • Product revenue of US$240.7 million, up 25 per cent year over year 
  • Service revenue of US$469.6 million, up 22 per cent year over year 
  • Billings of US$850.6 million, up 27 per cent year over year (1) 
  • Deferred revenue of US$2.75 billion, up 25 per cent year over year 
  • GAAP operating margin of 17.1 per cent, down 310 basis points year over year 
  • Non-GAAP operating margin of 24.5 per cent, up 210 basis points year over year (1) 
  • GAAP diluted net income per share of US$0.64 
  • Non-GAAP diluted net income per share of US$0.811 
  • Cash flow from operations of US$315.9 million 
  • Free cash flow of US$263.8 million (1) 

Fortinet® (Nasdaq: FTNT), a global leader in broad, integrated and automated cybersecurity solutions, has announced financial results for the first quarter ended March 31, 2021. 

Ken Xie, founder, chairman, and chief executive officer, Fortinet, said, “We delivered strong revenue and billings growth in the first quarter while investing to increase market share across our existing businesses and drive growth in newer product areas such as 5G, SASE, and SD-WAN.  

“Fortinet’s platform of on-premise and cloud security products is resonating with new and existing customers, confirmed by our highest quarterly product revenue growth in five years. With good visibility and strong business momentum, we are pleased to raise our full year guidance.” 

Financial highlights for the first quarter of 2021 

  • Revenue: Total revenue was US$710.3 million for the first quarter of 2021, an increase of 23.0 per cent compared to US$577.7 million for the same quarter of 2020. 
  • Product revenue: Product revenue was US$240.7 million for the first quarter of 2021, an increase of 25.2 per cent compared to US$192.3 million for the same quarter of 2020. 
  • Service revenue: Service revenue was US$469.6 million for the first quarter of 2021, an increase of 21.8 per cent compared to US$385.4 million for the same quarter of 2020. 
  • Billings (1): Total billings were US$850.6 million for the first quarter of 2021, an increase of 27.4 per cent compared to US$667.8 million for the same quarter of 2020. 
  • Deferred revenue: Total deferred revenue was US$2.75 billion as of March 31, 2021, an increase of 24.8 per cent compared to US$2.20 billion as of March 31, 2020. 
  • GAAP operating income and margin: GAAP operating income was US$121.6 million for the first quarter of 2021, representing a GAAP operating margin of 17.1 per cent. GAAP operating income was US$116.7 million for the same quarter of 2020, representing a GAAP operating margin of 20.2 per cent. 
  • Non-GAAP operating income and margin (1): Non-GAAP operating income was US$173.9 million for the first quarter of 2021, representing a non-GAAP operating margin of 24.5 per cent. Non-GAAP operating income was US$129.2 million for the same quarter of 2020, representing a non-GAAP operating margin of 22.4 per cent. 
  • GAAP net income and diluted net income per share: GAAP net income was US$107.2 million for the first quarter of 2021, compared to GAAP net income of US$104.6 million for the same quarter of 2020. GAAP diluted net income per share was US$0.64 for the first quarter of 2021, based on 166.4 million diluted weighted-average shares outstanding, compared to GAAP diluted net income per share of US$0.60 for the same quarter of 2020, based on 174.2 million diluted weighted-average shares outstanding. 
  • Non-GAAP net income and diluted net income per share (1): Non-GAAP net income was US$135.6 million for the first quarter of 2021, compared to non-GAAP net income of US$105.1 million for the same quarter of 2020. Non-GAAP diluted net income per share was US$0.81 for the first quarter of 2021, based on 166.4 million diluted weighted-average shares outstanding, compared to US$0.60 for the same quarter of 2020, based on 174.2 million diluted weighted-average shares outstanding. 
  • Cash flow: In the first quarter of 2021, cash flow from operations was US$315.9 million compared to US$319.4 million in the same quarter of 2020. 
  • Free cash flow (1): Free cash flow was US$263.8 million during the first quarter of 2021, compared to US$241.8 million for the same quarter of 2020. 

Guidance 

For the second quarter of 2021, Fortinet currently expects: 

  • Revenue in the range of US$733 million to US$747 million 
  • Billings in the range of US$860 million to US$880 million 
  • Non-GAAP gross margin in the range of 78.5 per cent to 79.5 per cent 
  • Non-GAAP operating margin in the range of 24.5 per cent to 25.5 per cent 
  • Diluted non-GAAP net income per share in the range of US$0.83 to US$0.88, assuming a non-GAAP effective tax rate of 21 per cent. This assumes a diluted share count of 168 million to 170 million. 

For the fiscal year 2021, Fortinet currently expects: 

  • Revenue in the range of US$3.080 billion to US$3.130 billion 
  • Service revenue in the range of US$2.020 billion to US$2.050 billion 
  • Billings in the range of US$3.685 billion to US$3.745 billion 
  • Non-GAAP gross margin in the range of 78.0 per cent to 80.0 per cent 
  • Non-GAAP operating margin in the range of 25.0 per cent to 27.0 per cent 
  • Diluted non-GAAP net income per share in the range of US$3.65 to US$3.80, assuming a non-GAAP effective tax rate of 21 per cent. This assumes a diluted share count of 170 million to 172 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, amortisation 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”. 

About Fortinet 
Fortinet (NASDAQ: FTNT) secures the largest enterprise, service provider, and government organisations around the world. Fortinet empowers our customers with complete visibility and control across the expanding attack surface and the power to take on ever-increasing performance requirements today and into the future. Only the Fortinet Security Fabric platform can address the most critical security challenges and protect data across the entire digital infrastructure, whether in networked, application, multi-cloud or edge environments. Fortinet ranks #1 in the most security appliances shipped worldwide and more than 500,000 customers trust Fortinet to protect their businesses. Both a technology company and a learning organisation, the Fortinet Network Security Expert (NSE) Training Institute has one of the largest and broadest cybersecurity training programs in the industry. Learn more at https://www.fortinet.com, the Fortinet Blog, or FortiGuard Labs

Copyright © 2021 Fortinet, Inc. All rights reserved. The symbols ® and ™ denote respectively federally registered trademarks and common law trademarks of Fortinet, Inc., its subsidiaries and affiliates. Fortinet’s trademarks include, but are not limited to, the following: Fortinet, FortiGate, FortiGuard, FortiCare, FortiManager, FortiAnalyzer, FortiOS, FortiADC, FortiAP, FortiAppMonitor, FortiASIC, FortiAuthenticator, FortiBridge, FortiCache, FortiCamera, FortiCASB, FortiClient, FortiCloud, FortiConnect, FortiController, FortiConverter, FortiDB, FortiDDoS, FortiExplorer, FortiExtender, FortiFone, FortiCarrier, FortiHypervisor, FortiIsolator, FortiMail, FortiMonitor, FortiNAC, FortiPlanner, FortiPortal, FortiPresence , FortiProxy, FortiRecorder, FortiSandbox, FortiSIEM, FortiSwitch, FortiTester, FortiToken, FortiVoice, FortiWAN, FortiWeb, FortiWiFi, FortiWLC, FortiWLCOS and FortiWLM. 

Other trademarks belong to their respective owners. Fortinet has not independently verified statements or certifications herein attributed to third parties and Fortinet does not independently endorse such statements. Notwithstanding anything to the contrary herein, nothing herein constitutes a warranty, guarantee, contract, binding specification or other binding commitment by Fortinet or any indication of intent related to a binding commitment, and performance and other specification information herein may be unique to certain environments. This news release may contain forward-looking statements that involve uncertainties and assumptions, such as statements regarding technology releases among others. Changes of circumstances, product release delays, or other risks as stated in our filings with the Securities and Exchange Commission, located at www.sec.gov, may cause results to differ materially from those expressed or implied in this press release. If the uncertainties materialise or the assumptions prove incorrect, results may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Fortinet assumes no obligation to update any forward-looking statements, and expressly disclaims any obligation to update these forward-looking statements. 

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