10-KPeriod: FY2013

Fortinet, Inc. Annual Report, Year Ended Dec 31, 2013

Filed March 3, 2014For Securities:FTNT

Summary

Fortinet, Inc. reported total revenue of $615.3 million for the fiscal year ended December 31, 2013, marking a 15% increase from the previous year. The company's core business revolves around providing integrated network security solutions, with its FortiGate appliances and FortiGuard subscription services forming the backbone of its offerings. Growth was observed across all geographic regions, with the Americas leading in absolute dollar terms. Services revenue showed a stronger growth rate (20%) compared to product revenue (12%), indicating a favorable shift towards recurring revenue streams. The company highlighted significant investments in research and development, alongside sales and marketing efforts, to drive product innovation and expand its market reach. Despite increased operating expenses, primarily due to hiring to support growth, Fortinet maintained a focus on its long-term strategy. The company also announced a $200 million share repurchase program, demonstrating a commitment to returning value to shareholders.

Financial Highlights

52 data points
Beta

Revenue

$615.30M

70.6% Gross Margin

Net Income

$44.27M

7.2% Net Margin

EPS (Diluted)

$0.05

Total Assets

$1.17B

Cash & Equivalents

$115.87M

Free Cash Flow

$147.38M

Financial Statements
Beta
Revenue$615.30M
Cost of Revenue$180.64M
Gross Profit$434.65M
R&D Expenses$102.66M
Operating Expenses$362.56M
Operating Income$72.09M
Net Income$44.27M
EPS (Basic)$0.05
EPS (Diluted)$0.05
Shares Outstanding (Basic)812.17M
Shares Outstanding (Diluted)840.91M

Key Highlights

  • 1Total revenue reached $615.3 million in 2013, a 15% increase year-over-year.
  • 2Services revenue grew by 20% to $329.7 million, outpacing product revenue growth of 12% ($278.0 million).
  • 3The company invested heavily in R&D and sales & marketing, leading to a 27% increase in operating expenses.
  • 4Cash, cash equivalents, and investments grew to $843.0 million.
  • 5Fortinet initiated a $200 million share repurchase program.
  • 6Gross margin declined slightly to 70.6% in 2013 from 72.4% in 2012, impacted by product mix and increased service costs.
  • 7Net income decreased by 33% to $44.3 million in 2013 compared to $66.8 million in 2012.

Frequently Asked Questions

Fortinet achieved a 15% year-over-year revenue increase, reaching $615.3 million. Services revenue demonstrated strong growth at 20%, and the company expanded its cash reserves to $843.0 million while initiating a significant share repurchase program.

Product revenue grew by 12% to $278.0 million, while services revenue saw a more substantial increase of 20% to $329.7 million. This indicates a growing reliance on and success within their subscription and support services.

Operating expenses increased by 27%, primarily driven by investments in research and development for new products and enhancements, and expanded sales and marketing efforts to increase global reach. Increased headcount to support business growth was also a significant factor.

Fortinet's board authorized a $200 million share repurchase program, indicating management's confidence in the company's financial health and its commitment to enhancing shareholder value. In 2013, the company repurchased $38.9 million worth of its shares.