01—Abstract
Summary
Summary of the 10-K filed February 26, 2016. Cited figures are marked; the original filing is the authoritative source.
Fortinet, Inc. demonstrated robust growth in its fiscal year 2015, reporting a 31% increase in total revenue to $1.01 billiona.
This growth was fueled by strong performance in both product and service segments, with services revenue slightly outpacing product revenue. The company's strategy to focus on enterprise customers appears to be paying off, as evidenced by increased sales of high-end FortiGate products. Fortinet also saw significant growth in its deferred revenue balance, up 42%b year-over-year, indicating strong future revenue potential.
Operationally, Fortinet increased its investment in sales and marketing by 49%c to drive further market share acquisition, particularly in the enterprise sector. This investment, along with continued R&D spending and headcount expansion (up 41%), led to a higher operating expense ratio compared to the previous year.
Despite increased expenses, the company managed to grow its cash, cash equivalents, and investments by 17% to $1.16 billiond, and generated substantial operating cash flow. The company also completed a strategic acquisition of Meru Networks to enhance its secure wireless offerings.
02—Key points
Key Highlights
- Total revenue grew 31% to $1.01 billion in FY2015, driven by strong product and service sales.
- Service revenue saw a 30% increase, slightly outpacing product revenue growth (32%).
- High-end FortiGate product sales increased, indicating success in targeting enterprise customers.
- Deferred revenue grew 42% to $791.3 million, signaling robust future revenue recognition.
- Significant investment in sales and marketing (up 49%) to capture market share, especially in the enterprise segment.
- Cash, cash equivalents, and investments increased 17% to $1.16 billion.
- Acquisition of Meru Networks for $41.8 million to expand secure wireless capabilities.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2015, Fortinet, Inc. kept $0.01.
- Revenue$1.01B100.0%
- Cost of revenue−$286.8M28.4%
- Gross profit$722.5M71.6%
- Operating costs−$707.6M70.1%
- Operating income$14.9M1.5%
- Interest, other & tax−$6.9M0.7%
- Net income$8.0M0.8%
Where FY2015 revenue went
$1.01B- Other operating costs: $549.5M, 54% of revenue
- Cost of revenue: $286.8M, 28% of revenue
- R&D: $158.1M, 16% of revenue
- Net income: $8.0M, 0.8% of revenue
- Interest, other & tax: $6.9M, 0.7% of revenue
Kept 0.8% as net incomeNet income $8.0M · 0.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 26, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $1.01B$770.36M | +31.0% |
| Cost of Revenue | $286.78M$231.01M | +24.1% |
| Gross Profit | $722.49M$539.36M | +34.0% |
| R&D Expenses | $158.13M$122.88M | +28.7% |
| Operating Expenses | $707.61M$480.03M | +47.4% |
| Operating Income | $14.88M$59.32M | −74.9% |
| Net Income | $7.99M$25.34M | −68.5% |
| EPS (Basic) | $0.01$0.03 | −66.7% |
| EPS (Diluted) | $0.01$0.03 | −66.7% |
| Shares Outstanding (Basic) | 851.92M819.15M | +4.0% |
| Shares Outstanding (Diluted) | 880.71M846.45M | +4.0% |
05—Questions
Frequently Asked Questions
What was Fortinet's revenue growth in 2015?
Fortinet reported a 31% increase in total revenue for fiscal year 2015, reaching $1.01 billion.
How did Fortinet's product and service revenues perform?
Product revenue increased by 32% to $476.8 million, while service revenue increased by 30% to $532.5 million in 2015. Service revenue slightly outpaced product revenue growth.
What is the significance of the increase in deferred revenue?
The 42% increase in deferred revenue to $791.3 million indicates that Fortinet has invoiced customers for services that will be recognized as revenue in future periods, providing a strong indicator of future revenue streams and business health.
What strategic initiatives did Fortinet undertake in 2015?
Fortinet significantly increased its investment in sales and marketing by 49% to drive market share, particularly in the enterprise sector. They also acquired Meru Networks to enhance their secure wireless solutions.
06—Continue