What is the significance of the Meru Networks acquisition to Fortinet's Q3 2015 results?

The acquisition of Meru Networks, completed on July 8, 2015, contributed $16.2 million to Fortinet's billings and $12.0 million to its GAAP revenue during the third quarter of 2015. While this acquisition bolstered overall figures, Fortinet also highlighted strong organic growth rates that exclude Meru's impact, demonstrating robust underlying business performance.

How should investors interpret the company's use of 'billings' as a financial metric?

Fortinet defines billings as revenue recognized plus the change in deferred revenue, less any deferred revenue acquired from business combinations. The company considers billings a useful metric because it drives deferred revenue, which is an indicator of business health and future revenue potential. It's important to note that billings are a non-GAAP measure and may differ from peer companies' reporting methods.

What does the increase in deferred revenue indicate for Fortinet?

The significant year-over-year increase of 41% in total deferred revenue, reaching $706.9 million as of September 30, 2015, is a strong positive indicator for investors. It suggests that Fortinet has secured future revenue streams from customers through contracts and advanced payments, pointing to sustained business momentum and customer commitment.

What were the primary drivers of Fortinet's revenue growth in Q3 2015?

Fortinet's revenue growth was driven by strong overall demand for its security solutions, as evidenced by a 35% year-over-year increase in total GAAP revenue to $260.1 million. This growth was achieved through both organic expansion (28.3% excluding Meru) and contributions from recent acquisitions like Meru Networks, which expanded the company's product and service offerings.

FTNT 8-K: Earnings & Results

Summary

Fortinet, Inc. (FTNT) filed an 8-K on October 27, 2015, reporting its third-quarter 2015 financial results. The report highlights strong year-over-year growth in both billings and revenue, underscoring the company's expanding market presence. A significant factor in this growth was the recent acquisition of Meru Networks, Inc., which contributed to billings and revenue during the quarter. Investors can take note of the substantial increase in deferred revenue, indicating robust future revenue potential and strong customer commitments. The company provided a detailed breakdown of its financial performance, emphasizing non-GAAP billings as a key metric. Total billings saw a significant 41% increase year-over-year, reaching $299.6 million, with Meru contributing $16.2 million. Even excluding Meru, the organic billings growth was an impressive 33%. GAAP revenue also demonstrated strong performance, growing 35% to $260.1 million, with Meru's contribution being $12.0 million. The substantial increase in deferred revenue to $706.9 million (up 41% year-over-year) further reinforces the positive outlook, suggesting sustained business momentum.

Key Highlights

1Total billings increased 41% year-over-year to $299.6 million for Q3 2015.
2Excluding the Meru acquisition, organic billings grew 33% year-over-year.
3Total GAAP revenue grew 35% year-over-year to $260.1 million for Q3 2015.
4Excluding Meru, organic GAAP revenue increased 28.3% year-over-year.
5Total deferred revenue increased 41% year-over-year to $706.9 million as of September 30, 2015.
6The acquisition of Meru Networks, completed on July 8, 2015, contributed $16.2 million in billings and $12.0 million in revenue during the partial quarter.
7The company defines and utilizes 'billings' as a key non-GAAP metric, providing insights into future revenue streams.

Fortinet, Inc. 8-K Report, Financial Results (Oct 27, 2015)

Summary

Key Highlights

Frequently Asked Questions