We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Fortinet (FTNT) Q4 Earnings and Revenues Surpass Estimates
Read MoreHide Full Article
Fortinet Inc. (FTNT - Free Report) delivered fourth-quarter 2019 non-GAAP earnings per share of 76 cents, which beat the Zacks Consensus Estimate of 70 cents and also improved significantly from the year-ago figure of 59 cents.
Moreover, revenues of $614 million surpassed the consensus estimate of $604 million and also increased 21% year over year, driven by advanced FortiGate technology with SPU, integrated Security Fabric platform and hybrid multi-cloud offerings.
Quarter in Detail
Segment wise, Product revenues increased 19% year over year to $238.8 million. The growth was driven by legacy firewall use cases and continued adoption of FortiGate based secure SD-WAN solution.
Services revenues rose 23% to $375.6 million. Notably, FortiGuard security subscription revenues grew 24% to $205 million. FortiCare technical support and other service revenues increased 21% to $170 million.
Billings were up 24% to $802 million, driven by solid execution and growth across EMEA and APAC.
During the quarter, the company secured 64 total deals worth more than $1 million. Secure SD-WAN was a leading contributor to growth in the number of deals in excess of $1 million.
The number of deals more than $250,000 rose 29% to 469 and the number of deals over $500K was up 53% to 197.
Geographically, revenues in America were up 23%, APAC up 22%, and EMEA up 19%.
Gross margin expanded 230 basis points (bps) year over year to 78%. Also, services gross margin expanded 90 bps to 88.2% as well as product gross margin grew 400 bps to 60.9%.
Non-GAAP operating income surged 31.3% to $529.2 million while non-GAAP operating margin expanded 110 bps to 27%.
Rise in the pace of hiring, mostly in sales and marketing, lower sales attrition and M&A spends were overhangs on margin.
Balance Sheet & Cash Flow
Fortinet exited the reported quarter with cash and cash equivalents, and short-term investments of approximately $2.07 billion, up from $1.94 billion recorded at the end of the previous quarter.
During the fourth quarter, the company generated operating cash flow of $190.4 million compared with $221.2 million in the previous quarter. Free cash flow was $143.2 million compared with $203.7 million in the third quarter.
In the fourth quarter, the company purchased approximately 303,000 shares of common stock for $23 million.
2019 Highlights
Fortinet reported revenues of $2.16 billion in 2019, which increased 20% from 2018.
Product revenue was $788.5 million, up 17% while Service revenue of $1.37 billion improved 21% year over year.
The company repurchased 1.9 million shares for $141 million in 2019.
Guidance
For 2020, the company expects revenues in the range of $2.525-$2.555 billion.
Moreover, non-GAAP earnings per share are anticipated in the range of $2.70-$2.73.
For 2020, billings are expected within $3.025-$3.075 billion.
Non-GAAP gross margin is projected in the range of 77.5-78.5%. Non-GAAP operating margin is anticipated between 23.5% and 24.5%.
For the first quarter of 2020, the company expects revenues of $555-$565 million. Billings are estimated in the band of $635-$655 million.
Non-GAAP earnings per share are envisioned within 50-52 cents.
Non-GAAP gross margin is expected in the range of 77.5-78.5% whereas non-GAAP operating margin is anticipated between 19% and 20%.
Zacks Rank and Stocks to Consider
Fortinet currently carries a Zacks Rank #4 (Sell).
Long-term earnings growth rate for Perficient, Applied Materials and ManTech is currently pegged at 11.75%, 8.2% and 8%, respectively.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.7% per year.
These 7 were selected because of their superior potential for immediate breakout.
Image: Bigstock
Fortinet (FTNT) Q4 Earnings and Revenues Surpass Estimates
Fortinet Inc. (FTNT - Free Report) delivered fourth-quarter 2019 non-GAAP earnings per share of 76 cents, which beat the Zacks Consensus Estimate of 70 cents and also improved significantly from the year-ago figure of 59 cents.
Moreover, revenues of $614 million surpassed the consensus estimate of $604 million and also increased 21% year over year, driven by advanced FortiGate technology with SPU, integrated Security Fabric platform and hybrid multi-cloud offerings.
Quarter in Detail
Segment wise, Product revenues increased 19% year over year to $238.8 million. The growth was driven by legacy firewall use cases and continued adoption of FortiGate based secure SD-WAN solution.
Services revenues rose 23% to $375.6 million. Notably, FortiGuard security subscription revenues grew 24% to $205 million. FortiCare technical support and other service revenues increased 21% to $170 million.
Billings were up 24% to $802 million, driven by solid execution and growth across EMEA and APAC.
During the quarter, the company secured 64 total deals worth more than $1 million. Secure SD-WAN was a leading contributor to growth in the number of deals in excess of $1 million.
The number of deals more than $250,000 rose 29% to 469 and the number of deals over $500K was up 53% to 197.
Geographically, revenues in America were up 23%, APAC up 22%, and EMEA up 19%.
Fortinet, Inc. Price, Consensus and EPS Surprise
Fortinet, Inc. price-consensus-eps-surprise-chart | Fortinet, Inc. Quote
Margins
Gross margin expanded 230 basis points (bps) year over year to 78%. Also, services gross margin expanded 90 bps to 88.2% as well as product gross margin grew 400 bps to 60.9%.
Non-GAAP operating income surged 31.3% to $529.2 million while non-GAAP operating margin expanded 110 bps to 27%.
Rise in the pace of hiring, mostly in sales and marketing, lower sales attrition and M&A spends were overhangs on margin.
Balance Sheet & Cash Flow
Fortinet exited the reported quarter with cash and cash equivalents, and short-term investments of approximately $2.07 billion, up from $1.94 billion recorded at the end of the previous quarter.
During the fourth quarter, the company generated operating cash flow of $190.4 million compared with $221.2 million in the previous quarter. Free cash flow was $143.2 million compared with $203.7 million in the third quarter.
In the fourth quarter, the company purchased approximately 303,000 shares of common stock for $23 million.
2019 Highlights
Fortinet reported revenues of $2.16 billion in 2019, which increased 20% from 2018.
Product revenue was $788.5 million, up 17% while Service revenue of $1.37 billion improved 21% year over year.
The company repurchased 1.9 million shares for $141 million in 2019.
Guidance
For 2020, the company expects revenues in the range of $2.525-$2.555 billion.
Moreover, non-GAAP earnings per share are anticipated in the range of $2.70-$2.73.
For 2020, billings are expected within $3.025-$3.075 billion.
Non-GAAP gross margin is projected in the range of 77.5-78.5%. Non-GAAP operating margin is anticipated between 23.5% and 24.5%.
For the first quarter of 2020, the company expects revenues of $555-$565 million. Billings are estimated in the band of $635-$655 million.
Non-GAAP earnings per share are envisioned within 50-52 cents.
Non-GAAP gross margin is expected in the range of 77.5-78.5% whereas non-GAAP operating margin is anticipated between 19% and 20%.
Zacks Rank and Stocks to Consider
Fortinet currently carries a Zacks Rank #4 (Sell).
A few better-ranked stocks in the broader technology sector are Perficient , Applied Materials (AMAT - Free Report) and ManTech International Corporation , each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Perficient, Applied Materials and ManTech is currently pegged at 11.75%, 8.2% and 8%, respectively.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.7% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>