01—Abstract
Summary
Summary of the 10-K filed March 2, 2015. Cited figures are marked; the original filing is the authoritative source.
Fortinet, Inc. reported strong revenue growth of 25% in fiscal year 2014, reaching $770.4 milliona, up from $615.3 million in fiscal year 2013.
This growth was driven by a 30% increase in product revenue and a 22% increase in services and other revenue. The company's core FortiGate product line, enhanced by its proprietary FortiASIC technology and FortiOS operating system, continues to be a primary revenue driver, with particular strength in high-end appliance sales to large enterprises and service providers. Fortinet also saw a significant increase in deferred revenue, growing 29% to $558.8 millionb, indicating strong future revenue potential from its subscription and support services.
Financially, Fortinet maintained a healthy balance sheet with cash, cash equivalents, and investments reaching $991.7 millionc. Operating cash flow also increased by 33% to $196.6 million.
The company continued its investment in sales and marketing to expand market share, particularly in the enterprise segment, which is expected to support sustained growth. Despite increased operating expenses due to these investments, Fortinet's financial performance demonstrates a robust growth trajectory and a solid market position in the cybersecurity landscape.
02—Key points
Key Highlights
- Total revenue grew 25% year-over-year to $770.4 million in fiscal 2014.
- Product revenue increased by 30% to $360.6 million, driven by strong demand for FortiGate appliances, especially high-end models.
- Services and other revenue increased by 22% to $409.8 million, reflecting growth in subscription and support services.
- Deferred revenue increased 29% to $558.8 million, providing visibility into future revenue.
- Cash, cash equivalents, and investments stood at $991.7 million, indicating strong liquidity.
- Operating cash flow increased 33% to $196.6 million, demonstrating effective cash generation.
- The company repurchased $38.6 million of its common stock under its share repurchase program.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2014, Fortinet, Inc. kept $0.03.
- Revenue$770.4M100.0%
- Cost of revenue−$231.0M30.0%
- Gross profit$539.4M70.0%
- Operating costs−$480.0M62.3%
- Operating income$59.3M7.7%
- Interest, other & tax−$34.0M4.4%
- Net income$25.3M3.3%
Where FY2014 revenue went
$770.4M- Other operating costs: $357.2M, 46% of revenue
- Cost of revenue: $231.0M, 30% of revenue
- R&D: $122.9M, 16% of revenue
- Net income: $25.3M, 3.3% of revenue
- Interest, other & tax: $34.0M, 4.4% of revenue
Kept 3.3% as net incomeNet income $25.3M · 3.3%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2014filed March 2, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $770.36M$615.30M | +25.2% |
| Cost of Revenue | $231.01M$180.64M | +27.9% |
| Gross Profit | $539.36M$434.65M | +24.1% |
| R&D Expenses | $122.88M$102.66M | +19.7% |
| Operating Expenses | $480.03M$362.56M | +32.4% |
| Operating Income | $59.32M$72.09M | −17.7% |
| Net Income | $25.34M$44.27M | −42.8% |
| EPS (Basic) | $0.03$0.05 | −44.4% |
| EPS (Diluted) | $0.03$0.05 | −42.3% |
| Shares Outstanding (Basic) | 819.15M812.17M | +0.9% |
| Shares Outstanding (Diluted) | 846.45M840.91M | +0.7% |
05—Questions
Frequently Asked Questions
What was Fortinet's revenue performance in fiscal year 2014?
Fortinet reported total revenue of $770.4 million for fiscal year 2014, representing a 25% increase compared to $615.3 million in fiscal year 2013. This growth was fueled by both product revenue (up 30%) and services and other revenue (up 22%).
How did Fortinet's product sales perform?
Product revenue saw a substantial increase of 30% year-over-year, reaching $360.6 million. This growth was primarily attributed to increased sales volume of FortiGate appliances, particularly the high-end models (FortiGate-1000 to -5000 series), which saw their share of FortiGate billings increase to 38%.
What is the significance of Fortinet's deferred revenue?
Deferred revenue increased by 29% to $558.8 million as of December 31, 2014. This significant growth indicates a strong pipeline of future recognized revenue from FortiGuard security subscription and FortiCare technical support services, providing good revenue visibility.
How is Fortinet investing for future growth?
Fortinet made significant investments in sales and marketing during fiscal 2014, increasing these expenses by 40% to capture market share, especially in the enterprise segment. They also continued to invest in research and development to maintain technological leadership, with R&D expenses increasing by 20%.
06—Continue