10-KPeriod: FY2021

Fortinet, Inc. Annual Report, Year Ended Dec 31, 2021

Filed February 25, 2022For Securities:FTNT

Summary

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 billion, 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 billion. Fortinet also managed its debt effectively, issuing $1.0 billion 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.

Financial Highlights

54 data points
Beta

Revenue

$3.34B

76.6% Gross Margin

Net Income

$606.79M

18.2% Net Margin

EPS (Diluted)

$0.73

Total Assets

$5.92B

Cash & Equivalents

$1.32B

Free Cash Flow

$1.50B

Financial Statements
Beta
Revenue$3.34B
Cost of Revenue$783.00M
Gross Profit$2.56B
R&D Expenses$424.20M
Operating Expenses$1.91B
Operating Income$650.40M
Interest Expense$14.90M
Net Income$606.79M
EPS (Basic)$0.74
EPS (Diluted)$0.73
Shares Outstanding (Basic)816.10M
Shares Outstanding (Diluted)835.30M

Key Highlights

  • 1Total revenue grew 29% year-over-year to $3.34 billion in 2021.
  • 2Product revenue increased by 37%, indicating strong demand for core offerings like FortiGate.
  • 3Service revenue grew 24%, driven by FortiGuard subscriptions and FortiCare support.
  • 4Operating income increased by 22% to $650.4 million.
  • 5Cash, cash equivalents, and investments surged by 53% to $2.99 billion, bolstering financial flexibility.
  • 6Total bookings increased by a significant 40.2% to $4.33 billion, suggesting strong future revenue potential.
  • 7The company successfully navigated supply chain challenges, albeit with some impact on product gross margins due to higher component and freight costs.

Frequently Asked Questions

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.

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.

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.

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.