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Fortinet Inc. (FTNT - Free Report) delivered fourth-quarter 2021 non-GAAP earnings per share (EPS) of $1.23, beating the Zacks Consensus Estimate of $1.14. The reported figure also improved significantly from the year-ago quarter’s earnings of $1.06 per share.
Moreover, revenues of $963.6 million topped the consensus mark of $962.8 million and increased 28.8% year over year. The top line was driven by strong demand for the company’s FortiGate technology, which includes a security processing unit, an integrated Security Fabric platform and hybrid multi-cloud offerings.
Strategic investments in developing powerful products and services, efforts to expand into the adjacent addressable markets and boost the firm’s global sales force aided Fortinet’s quarterly performance.
Fortinet stock has outperformed the Zacks Security Market industry over the past 12 months. FTNT stock has gained 89.2% in the last 12 months while the Security Market industry declined 29.7% over the same time frame.
Image Source: Zacks Investment Research
Quarter in Detail
Segment-wise, Product revenues jumped 31.4% year over year to $378.9 million. This uptick was supported by the continued adoption of the FortiGate-based secure SD-WAN solution as well as strong revenues at non-FortiGate products and increased demand for integrated security fabric products.
Services revenues climbed 27.2% to $584.7 million.
Billings were up 35.9% to $1.31 billion on solid execution and growth across all regions.
Geographically, the APAC region registered the highest top line with a 42.9% increase, followed by America’s 26.4% and the EMEA’s 24.3%.
During the December-end quarter, the company secured 122 total deals worth equal to or more than $1 million each. Secure SD-WAN continued to be the leading contributor to growth in terms of the number of deals worth more than $1 million in the December-end quarter as well. Secure SD-WAN accounted for 26 of the large deals won during the reported quarter.
Margins
The gross margin contracted 130 basis points (bps) year over year to 77.3% in the October-December period. This reflects a contraction of 100 bps in the Services gross margin and a decline of 110 bps in the Product gross margin.
Non-GAAP operating income jumped 24.9% to $274.7 million in the reported quarter, while non-GAAP operating margin shrunk 90 bps to 28.5%.
Balance Sheet & Cash Flow
Fortinet exited the fourth quarter with cash and cash equivalents and short-term investments of $2.51 billion, down from $3.08 billion reported at the end of the previous quarter.
During the October-December period, FTNT generated operating and free cash flow of $366.8 million and $215.5 million, respectively. In full-year 2021, it generated operating and free cash flow of $1.50 billion and $1.20 billion, respectively.
In October 2021, the company increased its share-repurchase authorization by $1.25 billion. During the fourth quarter, the company repurchased $541 million worth of its common stock while buying back $742 million worth of shares in full-year 2021. As of Dec 31, 2021, the company had approximately $1.5 billion left under the ongoing authorization, which is set to expire on Feb 28, 2023.
Guidance
Fortinet issued impressive guidance for the first quarter and full-year 2022. For the first quarter of 2022, the company estimates revenues in the range of $865-$895 million. Billings are estimated in the band of $1.05-$1.09 billion.
Non-GAAP gross margin is expected in the range of 75.5-76.5%, whereas non-GAAP operating margin is anticipated between 19.5% and 20.5%. Non-GAAP EPS are projected at 75-80 cents.
For 2022, Fortinet forecasts revenues and billings in the band of $4.275-$4.325 billion and $5.40-$5.48 billion, respectively. Non-GAAP EPS is anticipated between $4.85 and $5.00.
Non-GAAP gross margin is estimated in the range of 74-76%. The operating margin is anticipated in the band of 24-26%.
Zacks Rank & Stocks to Consider
Fortinet currently carries a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for Analog Devices’ first-quarter fiscal 2022 earnings has been revised upward by a penny to $1.79 per share over the past 30 days. For fiscal 2022, earnings estimates have moved upward by 1% to $7.53 per share over the past 30 days.
Analog Devices’ earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 6.1%. Shares of ADI have rallied 12.2% in the trailing 12 months.
The Zacks Consensus Estimate for CDW Corporation’s first-quarter 2022 earnings has been revised upward by five cents to $1.87 per share over the past 60 days. For 2022, earnings estimates have moved upward 12 cents to $8.73 per share in the past 60 days.
CDW Corporation’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 12.2%. CDW stock has rallied 29.7% over the past year.
The Zacks Consensus Estimate for NVIDIA’s fourth-quarter fiscal 2022 earnings has been revised upward to $1.22 per share from $1.09 90 days ago. For fiscal 2022, earnings estimates have been revised upward by a couple of cents to $4.35 per share in the past 30 days.
NVIDIA’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 7.7%. Shares of NVDA have increased 84.7% over the past year.
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Fortinet (FTNT) Beats Q4 Earnings Estimates, Guides Strong
Fortinet Inc. (FTNT - Free Report) delivered fourth-quarter 2021 non-GAAP earnings per share (EPS) of $1.23, beating the Zacks Consensus Estimate of $1.14. The reported figure also improved significantly from the year-ago quarter’s earnings of $1.06 per share.
Moreover, revenues of $963.6 million topped the consensus mark of $962.8 million and increased 28.8% year over year. The top line was driven by strong demand for the company’s FortiGate technology, which includes a security processing unit, an integrated Security Fabric platform and hybrid multi-cloud offerings.
Strategic investments in developing powerful products and services, efforts to expand into the adjacent addressable markets and boost the firm’s global sales force aided Fortinet’s quarterly performance.
Fortinet stock has outperformed the Zacks Security Market industry over the past 12 months. FTNT stock has gained 89.2% in the last 12 months while the Security Market industry declined 29.7% over the same time frame.
Quarter in Detail
Segment-wise, Product revenues jumped 31.4% year over year to $378.9 million. This uptick was supported by the continued adoption of the FortiGate-based secure SD-WAN solution as well as strong revenues at non-FortiGate products and increased demand for integrated security fabric products.
Services revenues climbed 27.2% to $584.7 million.
Billings were up 35.9% to $1.31 billion on solid execution and growth across all regions.
Geographically, the APAC region registered the highest top line with a 42.9% increase, followed by America’s 26.4% and the EMEA’s 24.3%.
During the December-end quarter, the company secured 122 total deals worth equal to or more than $1 million each. Secure SD-WAN continued to be the leading contributor to growth in terms of the number of deals worth more than $1 million in the December-end quarter as well. Secure SD-WAN accounted for 26 of the large deals won during the reported quarter.
Margins
The gross margin contracted 130 basis points (bps) year over year to 77.3% in the October-December period. This reflects a contraction of 100 bps in the Services gross margin and a decline of 110 bps in the Product gross margin.
Non-GAAP operating income jumped 24.9% to $274.7 million in the reported quarter, while non-GAAP operating margin shrunk 90 bps to 28.5%.
Balance Sheet & Cash Flow
Fortinet exited the fourth quarter with cash and cash equivalents and short-term investments of $2.51 billion, down from $3.08 billion reported at the end of the previous quarter.
During the October-December period, FTNT generated operating and free cash flow of $366.8 million and $215.5 million, respectively. In full-year 2021, it generated operating and free cash flow of $1.50 billion and $1.20 billion, respectively.
In October 2021, the company increased its share-repurchase authorization by $1.25 billion. During the fourth quarter, the company repurchased $541 million worth of its common stock while buying back $742 million worth of shares in full-year 2021. As of Dec 31, 2021, the company had approximately $1.5 billion left under the ongoing authorization, which is set to expire on Feb 28, 2023.
Guidance
Fortinet issued impressive guidance for the first quarter and full-year 2022. For the first quarter of 2022, the company estimates revenues in the range of $865-$895 million. Billings are estimated in the band of $1.05-$1.09 billion.
Non-GAAP gross margin is expected in the range of 75.5-76.5%, whereas non-GAAP operating margin is anticipated between 19.5% and 20.5%. Non-GAAP EPS are projected at 75-80 cents.
For 2022, Fortinet forecasts revenues and billings in the band of $4.275-$4.325 billion and $5.40-$5.48 billion, respectively. Non-GAAP EPS is anticipated between $4.85 and $5.00.
Non-GAAP gross margin is estimated in the range of 74-76%. The operating margin is anticipated in the band of 24-26%.
Zacks Rank & Stocks to Consider
Fortinet currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader technology sector include Analog Devices (ADI - Free Report) , CDW Corporation (CDW - Free Report) and NVIDIA Corporation (NVDA - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Analog Devices’ first-quarter fiscal 2022 earnings has been revised upward by a penny to $1.79 per share over the past 30 days. For fiscal 2022, earnings estimates have moved upward by 1% to $7.53 per share over the past 30 days.
Analog Devices’ earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 6.1%. Shares of ADI have rallied 12.2% in the trailing 12 months.
The Zacks Consensus Estimate for CDW Corporation’s first-quarter 2022 earnings has been revised upward by five cents to $1.87 per share over the past 60 days. For 2022, earnings estimates have moved upward 12 cents to $8.73 per share in the past 60 days.
CDW Corporation’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 12.2%. CDW stock has rallied 29.7% over the past year.
The Zacks Consensus Estimate for NVIDIA’s fourth-quarter fiscal 2022 earnings has been revised upward to $1.22 per share from $1.09 90 days ago. For fiscal 2022, earnings estimates have been revised upward by a couple of cents to $4.35 per share in the past 30 days.
NVIDIA’s earnings beat the Zacks Consensus Estimate in the preceding four quarters, the average surprise being 7.7%. Shares of NVDA have increased 84.7% over the past year.