Slide 1: Q3 2020 Financial Results
Q3 2020 Financial Results October 29, 2020 © Copyright Fortinet Inc. All rights reserved.
Slide 2: Safe Harbor Statement
Safe Harbor Statement Information, statements and projections contained in these presentation slides and related conference call concerning Fortinet's business outlook, the Q4 2020 guidance, and future prospects and expectations are forward-looking statements that involve risks and uncertainties. Th
Slide 3: Q3 2020 Non-GAAP Results
(1) Q3 2020 Non-GAAP Results Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Billings (2) $551.6M $622.4M $626.6M $802.3M $667.8M $711.5M $749.8M Y/Y % Change 19.1% 21.2% 18.8% 23.6% 21.1% 14.3% 19.7% Revenue $473.0M $523.8M $548.1M $618.1M $577.7M $617.6M $651.1M Y/Y % Change 18.5% 18.4% 20.9% 21.3% 22.1
Slide 4: Q3 2020 Non-GAAP Results (Continued)
Q3 2020 Non-GAAP Results (Continued)(1) Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Gross Margin (2) 77.2% 76.5% 78.2% 78.1% 78.8% 79.1% 79.5% Operating Income (2)(3) $97.0M $125.2M $145.2M $168.6M $129.2M $170.3M $178.6M Operating Margin (2)(3) 20.5% 23.9% 26.5% 27.3% 22.4% 27.6% 27.4% Net Income(2)(
Slide 5: Revenue by Geography
(1) Revenue by Geography Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Y/Y % Y/Y % Y/Y % Y/Y % Y/Y % Y/Y % Y/Y % ($ in millions) $ Change $ Change $ Change $ Change $ Change $ Change $ Change Americas $200.6 14.0% $226.4 19.3% $241.0 24.3% $252.2 23.1% $242.5 20.9% $261.0 15.3% $272.4 13.0% EMEA $177.4
Slide 6: Number of Deals & FortiGate Sales
Number of Deals & FortiGate Sales Number of Deals (1) Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 No. of Deals >$50K 1,683 1,906 1,908 2,565 2,121 2,111 2,267 No. of Deals >$250K 266 346 333 469 323 369 398 No. of Deals >$500K 108 147 130 197 120 146 168 No. of Deals >$1M 35 46 53 64 38 59 48 % of For
Slide 7: Statement of Cash Flows (Non-GAAP)
Statement of Cash Flows (Non-GAAP)(1) ($ in millions) Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 GAAP Net Income $59.1 $74.2 $80.2 $118.3 $104.6 $113.8 $123.4 Depreciation and Stock-Based Compensation 58.7 60.2 57.4 59.4 62.4 66.7 66.0 Accounts Receivable 63.6 (22.1) 19.0 (157.2) 69.6 (25.1) (47.6) I
Slide 8: Free Cash Flow and Adjusted Free Cash Flow Growth (Non-GAAP)
Free Cash Flow and Adjusted Free Cash Flow Growth (Non-GAAP) $262 $237 ($ in millions) $215 $212 $195 $187 $178 Reported Free Cash Flow $242 Real Estate Related Add Backs $204 $216 $191 $178 $186 $143 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 ◦ Free Cash Flow is a non-GAAP measure that we define as
Slide 9: Q4 2020 Guidance (Non-GAAP)
(1) Q4 2020 Guidance (Non-GAAP) Actual Q4'19 Q4'20 Billings (2) $802.3M $890 - 920M Y/Y Mid-Pt Growth 12.8% Revenue (GAAP) $618.1M $710 -730M Y/Y Mid-Pt Growth 16.5% Gross Margin (%) (3) 78.1% 78.0 - 80.0% Operating Margin (%) (3) (4) 27.3% 27.0 - 29.0% Net Income per Share(3) (4) (5) (6) $0.77 $0.9
Slide 10: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations(1) ($ in millions) Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 GAAP product gross profit $92.5 $107.2 $118.1 $146.1 $116.0 $127.5 $139.5 Stock‑based compensation 0.4 0.4 0.4 0.3 0.4 0.4 0.4 Amortization of acquired intangible assets 2.1 1.7 1.2 1.5 1.6 1.4 0.8 Non‑GAAP
Slide 11: GAAP to Non-GAAP Reconciliations (Continued)
GAAP to Non-GAAP Reconciliations (Continued)(1) ($ in millions) Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 GAAP general and administrative expense $24.5 $24.3 $26.1 $27.2 $28.8 $28.9 $29.4 Stock‑based compensation (5.0) (5.4) (5.1) (5.4) (5.3) (6.1) (5.9) Litigation-related matter — — — — — 0.7 — Non
Slide 12: GAAP to Non-GAAP Reconciliations (Continued)
GAAP to Non-GAAP Reconciliations (Continued)(1) ($ in millions) Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 GAAP other income (expense), net $(0.5) $(0.4) $(6.0) $(0.6) $(8.0) $0.9 $(1.0) (Gain) loss on investments in privately held companies — — 3.8 — 4.3 — — Non-GAAP other income (expense), net $(0.
Slide 13: GAAP to Non-GAAP Reconciliations (Continued)
GAAP to Non-GAAP Reconciliations (Continued)(1) ($ in millions) Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 GAAP net income $59.1 $74.2 $80.2 $118.3 $104.6 $113.8 $123.4 Stock‑based compensation 43.0 45.0 42.4 43.7 45.3 49.6 50.0 Amortization of acquired intangible assets 3.0 2.9 2.2 2.8 4.0 3.7 2.8 G
Slide 14: Revenue to Billings Reconciliation
(1) Revenue to Billings Reconciliation As Adjusted ($ in millions) Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Revenue $473.0 $523.8 $548.1 $618.1 $577.7 $617.6 $651.1 Add: Ending Deferred Revenue 1,745.4 1,844.0 1,922.5 2,109.1 2,199.2 2,293.1 2,392.0 Less: Beginning Deferred Revenue (1,666.8) (1,745
Slide 15: F° ATINET.
F° ATINET.