Summary
Fortinet, Inc. reported solid revenue growth in the second quarter of 2012, with total revenue reaching $129.0 million, a 25% increase year-over-year. Both product and services revenue contributed to this growth, increasing by 32% and 24% respectively. The company also demonstrated strong operational cash flow generation, with $92.8 million for the first six months of the year, reflecting an increase of 25% compared to the same period in 2011. The balance sheet remains robust with $644.4 million in cash, cash equivalents, and investments as of June 30, 2012, and a healthy deferred revenue balance of $331.4 million, indicating strong future revenue visibility. Despite the positive top-line and cash flow performance, investors should note a decrease in gross margin to 71.2% from 74.2% in the prior year's comparable quarter. This margin compression was attributed to a higher proportion of mid-range product sales at lower margins and increased investment in the technical support organization for services. Operating expenses also saw an increase, driven by investments in headcount for R&D and sales/marketing to support growth, although the company expects these expenses as a percentage of revenue to decline in the latter half of the year. Overall, Fortinet is executing on its growth strategy, supported by continued product innovation and expanding sales channels, but faces ongoing margin pressures.
Financial Highlights
49 data points| Revenue | $128.96M |
| Cost of Revenue | $37.13M |
| Gross Profit | $91.83M |
| R&D Expenses | $20.39M |
| Operating Expenses | $70.89M |
| Operating Income | $20.95M |
| Net Income | $13.95M |
| EPS (Basic) | $0.02 |
| EPS (Diluted) | $0.02 |
| Shares Outstanding (Basic) | 787.37M |
| Shares Outstanding (Diluted) | 830.30M |
Key Highlights
- 1Total revenue grew 25% year-over-year to $129.0 million for the three months ended June 30, 2012.
- 2Product revenue increased 32% and Services revenue increased 24% year-over-year.
- 3Operating cash flow increased 25% to $92.8 million for the six months ended June 30, 2012.
- 4Cash, cash equivalents, and investments increased to $644.4 million as of June 30, 2012.
- 5Deferred revenue increased to $331.4 million, indicating strong future revenue visibility.
- 6Gross margin decreased to 71.2% from 74.2% in the prior year's quarter, impacted by product mix and service investment.
- 7Operating expenses increased 23% due to investments in headcount for growth.