01—Abstract
Summary
Summary of the 10-K filed February 25, 2022. Cited figures are marked; the original filing is the authoritative source.
Fortinet, Inc. (FTNT) reported strong financial performance for the fiscal year ended December 30, 2021.
The company experienced a significant 29% increase in total revenue, reaching $3.34 billiona, driven by robust growth in both product revenue (+37%) and service revenue (+24%). This growth reflects the ongoing demand for cybersecurity solutions in an elevated threat landscape. The company's strategic focus on Security-Driven Networking, Zero Trust Access, Adaptive Cloud Security, and AI-Driven Security Operations appears to be resonating with customers, as evidenced by the broad-based revenue increases across product categories and geographic regions.
Financially, Fortinet demonstrated healthy growth in gross profit and operating income, up 26% and 22% respectively. The company also significantly strengthened its balance sheet, with cash, cash equivalents, and investments increasing by 53% to $2.99 billionb.
Fortinet also managed its debt effectively, issuing $1.0 billionc in senior notes while continuing its share repurchase program. The company's focus on innovation and expanding its Security Fabric platform, along with strategic acquisitions like Alaxala and ShieldX, positions it well for continued growth in the cybersecurity market.
02—Key points
Key Highlights
- Total revenue grew 29% year-over-year to $3.34 billion in 2021.
- Product revenue increased by 37%, indicating strong demand for core offerings like FortiGate.
- Service revenue grew 24%, driven by FortiGuard subscriptions and FortiCare support.
- Operating income increased by 22% to $650.4 million.
- Cash, cash equivalents, and investments surged by 53% to $2.99 billion, bolstering financial flexibility.
- Total bookings increased by a significant 40.2% to $4.33 billion, suggesting strong future revenue potential.
- The company successfully navigated supply chain challenges, albeit with some impact on product gross margins due to higher component and freight costs.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Fortinet, Inc. kept $0.18.
- Revenue$3.34B100.0%
- Cost of revenue−$783.0M23.4%
- Gross profit$2.56B76.6%
- Operating costs−$1.91B57.1%
- Operating income$650.4M19.5%
- Interest, other & tax−$43.6M1.3%
- Net income$606.8M18.2%
Where FY2021 revenue went
$3.34B- Other operating costs: $1.48B, 44% of revenue
- Cost of revenue: $783.0M, 23% of revenue
- Net income: $606.8M, 18% of revenue
- R&D: $424.2M, 13% of revenue
- Interest, other & tax: $43.6M, 1.3% of revenue
Kept 18% as net incomeR&D $424.2M · 13%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 25, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $3.34B$2.59B | +28.8% |
| Cost of Revenue | $783.00M$570.00M | +37.4% |
| Gross Profit | $2.56B$2.02B | +26.4% |
| R&D Expenses | $424.20M$341.40M | +24.3% |
| Operating Expenses | $1.91B$1.49B | +27.9% |
| Operating Income | $650.40M$531.80M | +22.3% |
| Interest Expense | $14.90M$0 | — |
| Net Income | $606.79M$488.50M | +24.2% |
| EPS (Basic) | $0.74$0.60 | +23.3% |
| EPS (Diluted) | $0.73$0.58 | +25.9% |
| Shares Outstanding (Basic) | 816.10M821.00M | −0.6% |
| Shares Outstanding (Diluted) | 835.30M838.30M | −0.4% |
05—Questions
Frequently Asked Questions
What was Fortinet's revenue growth in 2021 and what drove it?
Fortinet's total revenue grew by 29% in 2021 to $3.34 billion. This growth was driven by a 37% increase in product revenue, primarily from FortiGate products and other security fabric platform products, and a 24% increase in service revenue, stemming from FortiGuard security subscriptions and FortiCare technical support services.
How is Fortinet managing its financial position and cash flow?
Fortinet demonstrated strong financial health in 2021, with cash, cash equivalents, and investments increasing by 53% to $2.99 billion. The company also generated $1.50 billion in cash flow from operating activities, a 38% increase from 2020. Fortinet issued $1.0 billion in senior notes during the year and continued its share repurchase program, indicating effective capital management.
What are the key strategic initiatives mentioned by Fortinet?
Fortinet's business is focused on five key areas: Security-Driven Networking, Zero Trust Access, Adaptive Cloud Security, AI-Driven Security Operations, and Security as a Service. These areas represent their approach to providing integrated and automated cybersecurity solutions across various environments.
What are the major risks Fortinet faces, as highlighted in the 10-K?
Fortinet identifies several risks, including supply chain disruptions and component shortages (particularly chips), intense competition, reliance on third-party channel partners, potential for product vulnerabilities, and the dynamic nature of the cybersecurity landscape. The company also noted the ongoing impacts of the COVID-19 pandemic on its operations and supply chain.
06—Continue