What was the primary driver of Fortinet's revenue growth in Q1 2018?

Fortinet's revenue growth was primarily driven by its service revenue, which increased by 25% year-over-year. This growth was fueled by strong performance in FortiGuard security subscriptions and FortiCare technical support services.

How did the adoption of Topic 606 affect Fortinet's financial results?

The adoption of Topic 606, the new revenue recognition standard, positively impacted Fortinet's results. It led to the capitalization and amortization of certain sales commissions on service contracts, which reduced sales and marketing expenses and contributed to a significant increase in reported operating income. For example, sales and marketing expenses saw a $11.7 million benefit from this adoption.

Did Fortinet return capital to shareholders in Q1 2018?

Yes, Fortinet actively returned capital to shareholders by repurchasing approximately 2.5 million shares of common stock for a total of $115.5 million during the first quarter of 2018 under its Share Repurchase Program.

FTNT 10-Q Quarterly Report Q1 FY2018 — Revenue, Net Income, EPS

Q: What is Fortinet's current liquidity position?

As of March 31, 2018, Fortinet maintained a strong liquidity position with $1.39 billion in cash, cash equivalents, and investments. The company also reported $706.1 million in working capital.

Summary

Fortinet, Inc. reported strong performance for the first quarter of 2018, with total revenue reaching $399.0 million, a 17% increase year-over-year. This growth was primarily driven by a significant 25% surge in service revenue, including strong contributions from FortiGuard security subscriptions and FortiCare technical support. The company also demonstrated substantial operational improvement, with operating income increasing by an impressive 500% to $32.4 million, largely attributable to enhanced gross margins and operating expense management, including a notable benefit from the adoption of the new revenue recognition standard (Topic 606). Financially, Fortinet maintained a robust balance sheet with $1.39 billion in cash, cash equivalents, and investments. The company generated $139.7 million in cash from operating activities, showcasing strong operational cash flow generation. Additionally, Fortinet continued its commitment to shareholder returns by repurchasing $115.5 million of its common stock during the quarter, underscoring its financial health and strategic capital allocation. The adoption of Topic 606, while complex, appears to have positively impacted the reported operating income and revenue growth metrics.

Financial Highlights

51 data points

Beta

Revenue

$399.00M

0.8% Gross Margin

Net Income

$41.60M

0.1% Net Margin

EPS (Diluted)

$0.05

Total Assets

$2.40B

Cash & Equivalents

$835.60M

Free Cash Flow

$128.10M

Financial Statements

Beta

Revenue	$399.00M
Cost of Revenue	$97.20M
Gross Profit	$301.80M
R&D Expenses	$59.10M
Operating Expenses	$269.40M
Operating Income	$32.40M
Net Income	$41.60M
EPS (Basic)	$0.05
EPS (Diluted)	$0.05
Shares Outstanding (Basic)	838.50M
Shares Outstanding (Diluted)	859.00M

Key Highlights

1Total revenue increased by 17% year-over-year to $399.0 million, driven by robust service revenue growth (up 25%).
2Operating income saw a substantial increase of 500% to $32.4 million, indicating improved operational efficiency.
3The adoption of new revenue recognition standard (Topic 606) had a positive impact, particularly on sales and marketing expenses and reported operating income.
4Fortinet maintained a strong liquidity position with $1.39 billion in cash, cash equivalents, and investments.
5Generated $139.7 million in cash flow from operating activities, an 8% increase year-over-year.
6Repurchased $115.5 million of common stock during the quarter as part of its Share Repurchase Program.

Fortinet, Inc. Quarterly Report for Q1 Ended Mar 31, 2018

Summary

Financial Highlights

Key Highlights

Frequently Asked Questions