Slide 1: Q2 2024 Financial Results
Q2 2024 Financial Results August 6, 2024
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 third quarter and full year 2024 guidance, and future prospects and expectations are forward-looking statements that involve ri
Slide 3: Huge Market Opportunity 2028 – $282B
Huge Market Opportunity 2028 – $282B Secure networking larger than networking by 2026 Note 1: Gartner – Forecast: Information Security, Worldwide, 2022-2028, 2Q24 Update - 3 July 2024 - ID G00817172 © Fortinet Inc. All Rights Reserved. 3 Note 2: Gartner - Forecast: Enterprise Network Equipment by Ma
Slide 4: The Most Comprehensive & Advanced Cybersecurity Platform
The Most Comprehensive & Advanced Cybersecurity Platform © Fortinet Inc. All Rights Reserved. 4
Slide 5: Two New Technologies Added to Accelerate Growth
Two New Technologies Added to Accelerate Growth © Fortinet Inc. All Rights Reserved. 5
Slide 6: Secure Networking Surpasses Networking in 2026
Secure Networking Surpasses Networking in 2026 Note: Company Estimates with Gartner, Market Share: Enterprise Network Equipment by Market Segment, Worldwide, 1QCY24, June 2024 as base. © Fortinet Inc. All Rights Reserved. 6
Slide 7: Unified SASE and AI-driven SecOps Account for One-Third of Total Billings
Unified SASE and AI-driven SecOps Account for One-Third of Total Billings 1 1,2 1 Note 1: All Solutions include products and services. Note 2: As noted on slide 5 Unified SASE includes SSE and related solutions. © Fortinet Inc. All Rights Reserved. 7
Slide 8: Unified SASE and SecOps Customer Mix
Unified SASE and SecOps Customer Mix1 Note 1: Based on invoiced amounts for the quarter ended June 30, 2024. Note 2: All Solutions include products and services. © Fortinet Inc. All Rights Reserved. 8 Note 3: As noted on slide 5 Unified SASE includes SSE and related solutions.
Slide 9: Our Investments Are Clearly Working
Our Investments Are Clearly Working 11 1 Note 1: PANW's calendar year product revenue is calculated from February 1st of the year shown and ending on January 31st of the following year. © Fortinet Inc. All Rights Reserved. 9
Slide 10: Fortinet Secures Over Half a Million Organizations Worldwide
Fortinet Secures Over Half a Million Organizations Worldwide Over 755,000 enterprises, service providers, and government organizations around the world trust Fortinet to secure their operations Notes: Based on 2023 billings data. G2000 is based on the 2022 Forbes list; total number of accounts is 1,
Slide 11: © Fortinet Inc. All Rights Reserved.
© Fortinet Inc. All Rights Reserved. 11
Slide 12: Fortinet Recognized in Gartner Magic Quadrant Reports
® TM Fortinet Recognized in 5 Gartner Magic Quadrant Reports, Based on the Same Operating System Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designat
Slide 13: Q2 2024 Non-GAAP Results
Q2 2024 Non-GAAP Results Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Billings (1) $1.304B $1.411B $1.719B $1.503B $1.541B $1.491B $1.865B $1.407B $1.541B Y/Y % Change 35.7% 32.6% 31.6% 29.6% 18.1% 5.7% 8.5% (6.4)% —% Revenue $1.030B $1.150B $1.283B $1.262B $1.293B $1.335B $1.415B $1.353B $
Slide 14: Q2 2024 Non-GAAP Results
Q2 2024 Non-GAAP Results Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Gross Profit (1) $788.5M $875.5M $996.0M $963.6M $1.01B $1.03B $1.11B $1.06B $1.17B Gross Margin (1) 76.5% 76.2% 77.6% 76.3% 77.9% 76.9% 78.5% 78.1% 81.5% Operating Income (1)(2) $255.4M $324.9M $417.6M $334.0M $348.1M $3
Slide 15: Revenue by Geography
Revenue by Geography Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 ($ in millions) $ % $ % $ % $ % $ % $ % $ % $ % $ % % is Y/Y % Change Americas $413.6 22.7% $467.6 33.6% $521.2 36.9% $523.5 36.8% $537.0 29.8% $545.6 16.7% $569.1 9.2% $557.0 6.4% $595.3 10.9% EMEA $391.8 28.0% $443.9 37.3%
Slide 16: Statement of Cash Flows (Non-GAAP)
Statement of Cash Flows (Non-GAAP) ($ in millions) Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 GAAP Net Income Including Non-controlling Interests $173.4 $231.1 $313.8 $247.7 $266.3 $322.9 $310.9 $299.3 $379.8 Depreciation, Amortization and Stock-Based Compensation 79.8 81.1 82.0 83.8 92.4
Slide 17: Free Cash Flow and Adjusted Free Cash Flow Growth
Free Cash Flow and Adjusted Free Cash Flow Growth $820.6 ($ in millions) $662.1 $509.8 $530.8 $497.7 $463.8 Reported Free Cash Flow (1) $304.7 $324.0 Real Estate Related Add Backs (2) $647.2 $608.5 $497.2 $481.1 $395.2 $438.3 $167.7 $283.5 $318.9 $164.8 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'2
Slide 18: Returned $5.3 Billion to Shareholders via Share Repurchases Since 2020
Returned $5.3 Billion to Shareholders via Share Repurchases Since 2020 Note (1) As of August 1, 2024 (2) Capital Deployment includes share repurchases, infrastructure investments, and M&A. 2024 YTD is based on share repurchases and infrastructure investments from January 1, 2024 – June 30, 2024 and
Slide 19: Days to Register Security Service Contracts
Days to Register Security Service Contracts Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Note: Days to register security service contracts is the average number of days from the sale to the activation date of the
Slide 20: Consistent Execution — 'Rule of 40' Since 2009 IPO
Consistent Execution — ‘Rule of 40’ Since 2009 IPO Note: Fortinet’s IPO was on November 18, 2009. © Fortinet Inc. All Rights Reserved. 20 Fortinet defines the Rule of 40 as GAAP revenue Y/Y growth plus Non-GAAP Operating Margin. See Appendix for reconciliation of the non-GAAP financial measures to t
Slide 21: Q3 and 2024 Guidance (Non-GAAP)
Q3 and 2024 Guidance (Non-GAAP)(1) Actual Q3'24E Actual 2023 2024E Q3'23 Billings (2) $1.491B $1.530 -1.600B $6.400B $6.400 - 6.600B Y/Y Mid-Pt Growth 4.9% 1.6% Revenue (GAAP) $1.335B $1.445 - 1.505B $5.305B $5.800 - 5.900B Y/Y Mid-Pt Growth 10.5% 10.3% Service Revenue (GAAP) $868.7M $3.378B $3.975
Slide 22: Additional Modeling Points
Additional Modeling Points Actual Actual Actual Actual Actual Q3’24E 2024E Q3'23 Q4'23 2023 Q1'24 Q2'24 Cash Paid for Taxes $26M $341M $426M $31M $252M $125 - $145M $525 - $575M Capital Expenditures $70M $27M $204M $222M $23M $40 - 60M $320 - $360M Non-GAAP Tax Rate 17% 17% 17% 17% 17% 17% 17% © For
Slide 23: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations ($ in millions) Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Total revenue $1,030.1 $1,149.5 $1,283.0 $1,262.3 $1,292.8 $1,334.6 $1,415.1 $1,353.3 $1,434.3 Add: Change in deferred revenue 274.1 261.5 446.8 240.6 247.7 156.7 449.7 54.9 106.3 Less: Deferred re
Slide 24: GAAP to Non-GAAP Reconciliations (Continued)
GAAP to Non-GAAP Reconciliations (Continued) ($ in millions) Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 GAAP product gross profit $245.5 $283.5 $350.2 $307.1 $298.1 $267.6 $290.9 $226.1 $296.8 Stock-based compensation 0.4 0.5 0.4 0.4 0.5 0.4 0.5 0.5 0.4 Amortization of acquired intangible
Slide 25: GAAP to Non-GAAP Reconciliations (Continued)
GAAP to Non-GAAP Reconciliations (Continued) ($ in millions) Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 GAAP general and administrative expense $45.4 $40.7 $44.3 $52.8 $49.9 $53.5 $55.1 $54.4 $56.6 Stock-based compensation (7.7) (7.4) (7.8) (8.2) (9.9) (9.9) (9.9) (9.8) (10.2) Non-GAAP ge
Slide 26: GAAP to Non-GAAP Reconciliations (Continued)
GAAP to Non-GAAP Reconciliations (Continued) ($ in millions) Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 GAAP provision for (benefit from) income taxes $2.4 $27.3 $9.2 $21.3 $27.6 $(0.3) $95.2 $39.5 $76.5 Tax adjustments related to the above 39.1 27.8 63.6 38.5 35.0 67.6 (13.0) 30.3 14.3 N
Slide 27: F=SRTINET.
F=SRTINET.