Slide 1: Q3 2024 Financial Results
Q3 2024 Financial Results November 7, 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 fourth quarter and full year 2024 guidance, and future prospects and expectations are forward-looking statements that involve r
Slide 3: More External Forces Than Ever Are Driving Security Decisions
More External Forces Than Ever Are Driving Security Decisions © Fortinet Inc. All Rights Reserved. 3
Slide 4: The Broadest, Most Integrated AI-Driven Platform in Cybersecurity
The Broadest, Most Integrated AI-Driven Platform in Cybersecurity 50+ tightly integrated product lines © Fortinet Inc. All Rights Reserved. 4
Slide 5: Our Pillars
Our Pillars Note 1: SD-WAN includes a percentage of certain FortiGate billings © Fortinet Inc. All Rights Reserved. 5
Slide 6: A Large & Growing Total Addressable Market
A Large & Growing Total Addressable Market Worldwide TAM Growing from $183B in 2024 to $284B in 2028, a +12% CAGR. Gartner, August 2024- Forecast: Enterprise Network Equipment by Market Segment, Worldwide, 2022-2028, 2Q24 Update Gartner, August 2024- Forecast: Information Security and Risk Managemen
Slide 7: Billings Mix and Growth Rates by Pillar
Billings Mix and Growth Rates by Pillar1 2 2 Note (1) In Q3’24, a minor adjustment was made to the pillar allocations, which impacted the billings mix in Q3’23 and Q4’23. Please see slide 25 for the revised billings mix for each of the pillars © Fortinet Inc. All Rights Reserved. 7 (2) Unified SASE
Slide 8: Industry Leader in Secure Networking – Landing with Firewall
Industry Leader in Secure Networking – Landing with Firewall Cumulative Units Shipped: 13M+ Note 1: 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. 8
Slide 9: Expanding with SASE and SecOps
Expanding with SASE and SecOps1 Note 1: Based on invoiced amounts for the quarter ended September 30, 2024. © Fortinet Inc. All Rights Reserved. 9
Slide 10: Gartner Magic Quadrant recognition
Magic Quadrant for Endpoint Protection Platforms – Published 23 September 2024 – ID G00808300 Magic Quadrant for Security Information and Event Management – Published 08 May 2024 – ID G00780705 GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and
Slide 11: Leadership in Five Network Security Gartner Magic Quadrants
Leadership in Five Network Security Gartner Magic Quadrants All with a single operating system (FortiOS) GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and Magic Quadrant for Network Firewalls - Published 19 December 2022 - ID G00761497 – Rajpre
Slide 12: Leading with the Only Internally Developed ASIC-Powered SD-WAN
Leading with the Only Internally Developed ASIC-Powered SD-WAN © Fortinet Inc. All Rights Reserved. 12
Slide 13: Q3 2024 Non-GAAP Results
Q3 2024 Non-GAAP Results Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Billings (1) $1.411B $1.719B $1.503B $1.541B $1.491B $1.865B $1.407B $1.541B $1.582B Y/Y % Change 32.6% 31.6% 29.6% 18.1% 5.7% 8.5% (6.4)% —% 6.1% Revenue $1.150B $1.283B $1.262B $1.293B $1.335B $1.415B $1.353B $1.434B $1
Slide 14: Q3 2024 Non-GAAP Results
Q3 2024 Non-GAAP Results Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Gross Profit (1) $875.5M $996.0M $963.6M $1.01B $1.03B $1.11B $1.06B $1.17B $1.26B Gross Margin (1) 76.2% 77.6% 76.3% 77.9% 76.9% 78.5% 78.1% 81.5% 83.2% Operating Income (1)(2) $324.9M $417.6M $334.0M $348.1M $371.4M $45
Slide 15: Revenue by Geography
Revenue by Geography Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 ($ in millions) $ % $ % $ % $ % $ % $ % $ % $ % $ % % is Y/Y % Change Americas $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% $624.0 14.4% EMEA $443.9 37.3% $510.1 37.6%
Slide 16: Statement of Cash Flows (Non-GAAP)
Statement of Cash Flows (Non-GAAP) ($ in millions) Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 GAAP Net Income Including gain on bargain purchase $231.1 $313.8 $247.7 $266.3 $322.9 $310.9 $299.3 $379.8 $539.9 Depreciation, Amortization and Stock-Based Compensation 81.1 82.0 83.8 92.4 92.6
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 $604.8 $509.8 $530.8 $497.7 $463.8 Reported Free Cash Flow (1) $324.0 Real Estate Related Add Backs (2) $647.2 $608.5 $571.8 $497.2 $395.2 $438.3 $481.1 $167.7 $318.9 $164.8 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'2
Slide 18: Consistent Execution — 'Rule of 40'
Consistent Execution — ‘Rule of 40’ Note: 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 the most comparable GAAP financial measures. Fortinet’s IPO was on November 18, 2009. © Fortinet
Slide 19: Q4 and 2024 Guidance (Non-GAAP)
Q4 and 2024 Guidance (Non-GAAP)(1) Actual Q4'24E Actual 2023 2024E Q4'23 Billings (2) $1.865B $1.900 - 2.000B $6.400B $6.430 - 6.530B Y/Y Mid-Pt Growth 4.6% 1.3% Revenue (GAAP) $1.415B $1.560 - 1.620B $5.305B $5.856 - 5.916B Y/Y Mid-Pt Growth 12.4% 10.9% Service Revenue (GAAP) $927.0M $3.378B $4.015
Slide 20: Additional Modeling Points
Additional Modeling Points Actual Actual Actual Actual Actual Q4’24E 2024E Q4'23 2023 Q1'24 Q2'24 Q3'24 Cash Paid for Taxes $341M $426M $31M $252M $140M $127 - $177M $550 - $600M Capital Expenditures $27M $204M $222M $23M $36M $100 - $120M $380 - $400M Non-GAAP Tax Rate 17% 17% 17% 17% 17% 17% 17% ©
Slide 21: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations ($ in millions) Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 Total revenue $1,149.5 $1,283.0 $1,262.3 $1,292.8 $1,334.6 $1,415.1 $1,353.3 $1,434.3 $1,508.1 Add: Change in deferred revenue 261.5 446.8 240.6 247.7 156.7 449.7 54.9 106.3 115.5 Less: Deferred re
Slide 22: GAAP to Non-GAAP Reconciliations (Continued)
GAAP to Non-GAAP Reconciliations (Continued) ($ in millions) Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 GAAP product gross profit $283.5 $350.2 $307.1 $298.1 $267.6 $290.9 $226.1 $296.8 $337.8 Stock-based compensation 0.5 0.4 0.4 0.5 0.4 0.5 0.5 0.4 0.5 Amortization of acquired intangible
Slide 23: GAAP to Non-GAAP Reconciliations (Continued)
GAAP to Non-GAAP Reconciliations (Continued) ($ in millions) Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 GAAP general and administrative expense $40.7 $44.3 $52.8 $49.9 $53.5 $55.1 $54.4 $56.6 $71.7 Stock-based compensation (7.4) (7.8) (8.2) (9.9) (9.9) (9.9) (9.8) (10.2) (10.7) Litigation
Slide 24: GAAP to Non-GAAP Reconciliations (Continued)
GAAP to Non-GAAP Reconciliations (Continued) ($ in millions) Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Q2'24 Q3'24 GAAP provision for (benefit from) income taxes $27.3 $9.2 $21.3 $27.6 $(0.3) $95.2 $39.5 $76.5 $81.2 Tax adjustments related to the above 27.8 63.6 38.5 35.0 67.6 (13.0) 30.3 14.3 19.8
Slide 25: Billings Mix by Pillar
Billings Mix by Pillar Note 1: In Q3’24, a minor adjustment was made to the pillar allocations, which impacted the billings mix in Q3’23 and Q4’23. © Fortinet Inc. All Rights Reserved. 25
Slide 26: Fortinet
F=SRTINET.