Slide 1: Q1 2024 Financial Results
Q1 2024 Financial Results May 2, 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 second quarter and full year 2024 guidance, and future prospects and expectations are forward-looking statements that involve r
Slide 3: Fortify Your Networks
Fortify Your Networks © Fortinet Inc. All Rights Reserved. 3
Slide 4: Segment Breakdown Q1'24 Billings
Segment Breakdown Q1’24 Billings Note 1: All solutions include products and services. © Fortinet Inc. All Rights Reserved. 4 Note 2: SD-WAN includes a percentage of certain FortiGate billings.
Slide 5: TAM of $144B in 2024 Growing to $222B by 2028
TAM of $144B in 2024 Growing to $222B by 2028 Gartner, March 2024- Forecast: Enterprise Network Equipment by Market Segment, Worldwide, 2022-2028, 1Q24 Update © Fortinet Inc. All Rights Reserved. 5 Gartner, March 2024- Forecast: Information Security and Risk Management, Worldwide, 2022-2028, 1Q24 Up
Slide 6: Single-Vendor SASE Requires a Hybrid Approach
Single-Vendor SASE Requires a Hybrid Approach © Fortinet Inc. All Rights Reserved. 6
Slide 7: Unified SASE is 24% of Total Billings in Q1'24
Unified SASE is 24% of Total Billings in Q1'24 1 2 2, 3 2 Note 1: The Q4 2023 billings mix shown above is correct. There was a miscalculation in the data shown in the Q4'23 investor presentation. Note 2: All Solutions include products and services. © Fortinet Inc. All Rights Reserved. 7 Note 3: SD-W
Slide 8: SASE and SecOps Customer Mix
SASE and SecOps Customer Mix1 2,3 2 Note 1: Based on invoiced amounts for the quarter ended March 31, 2024. Note 2: All Solutions include products and services. © Fortinet Inc. All Rights Reserved. 8 Note 3: SD-WAN includes a percentage of certain FortiGate billings.
Slide 9: Our Investments Are Clearly Working
Our Investments Are Clearly Working 1 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 700,000 enterprises, service providers, and government organizations around the world trust Fortinet to secure their operations Notes: Based off 2023 billings data. G2000 is based off the 2022 Forbes list; total number of accounts is
Slide 11: © Fortinet Inc. All Rights Reserved.
© Fortinet Inc. All Rights Reserved. 11
Slide 12: Fortinet Recognized in Gartner Magic Quadrant Reports
Fortinet Recognized in 5 Gartner® Magic QuadrantTM 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 designatio
Slide 13: Q1 2024 Non-GAAP Results
Q1 2024 Non-GAAP Results 2-YR Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 CAGR(2) Billings (1) $1.160B $1.304B $1.411B $1.719B $1.503B $1.541B $1.491B $1.865B $1.407B 10.2% Y/Y % Change 36.4% 35.7% 32.6% 31.6% 29.6% 18.1% 5.7% 8.5% (6.4)% Revenue $954.8M $1.030B $1.150B $1.283B $1.262B $1.
Slide 14: Q1 2024 Non-GAAP Results
Q1 2024 Non-GAAP Results Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Gross Profit (1) $710.2M $788.5M $875.5M $996.0M $963.6M $1.01B $1.03B $1.11B $1.06B Gross Margin (1) 74.4% 76.5% 76.2% 77.6% 76.3% 77.9% 76.9% 78.5% 78.1% Operating Income (1)(2) $210.2M $255.4M $324.9M $417.6M $334.0M $
Slide 15: Revenue by Geography
Revenue by Geography Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 ($ in millions) $ % $ % $ % $ % $ % $ % $ % $ % $ % % is Y/Y % Change Americas $382.6 31.5% $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% EMEA $346.0 25.5% $391.8 28.0%
Slide 16: Statement of Cash Flows (Non-GAAP)
Statement of Cash Flows (Non-GAAP) ($ in millions) Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 GAAP Net Income Including Non-controlling Interests $138.3 $173.4 $231.1 $313.8 $247.7 $266.3 $322.9 $310.9 $299.3 Depreciation, Amortization and Stock-Based Compensation 78.7 79.8 81.1 82.0 83.8
Slide 17: Free Cash Flow and Adjusted Free Cash Flow Growth
Free Cash Flow and Adjusted Free Cash Flow Growth ($ in millions) (1) (2) Notes (1) Free Cash Flow is a non-GAAP measure that we define as net cash provided by operating activities minus purchases of property and equipment. (2) Adjusted Free Cash Flow is a non-GAAP measure that we define as Free Cas
Slide 18: Returned $5.3 Billion to Shareholders via Share Repurchases
Returned $5.3 Billion to Shareholders via Share Repurchases(1) Note (1) Share repurchases from January 1, 2020 - December 31, 2023 (2) As of March 31, 2024 © Fortinet Inc. All Rights Reserved. 18
Slide 19: Days to Register Security Service Contracts
Days to Register Security Service Contracts Note: Days to register security service contracts is the average number of days from FortiGate and security contract sale to the date the security contract is © Fortinet Inc. All Rights Reserved. 19 registered by the customer.
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.
Slide 21: Q2 and 2024 Guidance (Non-GAAP)
Q2 and 2024 Guidance (Non-GAAP)(1) Actual Q2'24E Actual 2023 2024E Q2'23 Billings (2) $1.541B $1.490 - 1.550B $6.400B $6.400 - 6.600B Y/Y Mid-Pt Growth (1.3)% 1.6% Revenue (GAAP) $1.293B $1.375 - 1.435B $5.305B $5.745 - 5.845B Y/Y Mid-Pt Growth 8.7% 9.2% Service Revenue (GAAP) $820.2M $3.378B $3.940
Slide 22: Additional Modeling Points
Additional Modeling Points Actual Q2'23 Actual 2023 Actual Q1'24 Q2’24E 2024E Cash Paid for Taxes $38M $426M $31M $240 - $270M $500 - $550M Capital Expenditures $77M $204M $222M $30 - $40M $350 - $400M Non-GAAP Tax Rate 17% 17% 17% 17% 17% © Fortinet Inc. All Rights Reserved. 22
Slide 23: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations ($ in millions) Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 Total revenue $954.8 $1,030.1 $1,149.5 $1,283.0 $1,262.3 $1,292.8 $1,334.6 $1,415.1 $1,353.3 Add: Change in deferred revenue 205.0 274.1 261.5 446.8 240.6 247.7 156.7 449.7 54.9 Less: Deferred reve
Slide 24: GAAP to Non-GAAP Reconciliations (Continued)
GAAP to Non-GAAP Reconciliations (Continued) ($ in millions) Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 GAAP product gross profit $210.0 $245.5 $283.5 $350.2 $307.1 $298.1 $267.6 $290.9 $226.1 Stock‐based compensation 0.4 0.4 0.5 0.4 0.4 0.5 0.4 0.5 0.5 Amortization of acquired intangible
Slide 25: GAAP to Non-GAAP Reconciliations (Continued)
GAAP to Non-GAAP Reconciliations (Continued) ($ in millions) Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 GAAP general and administrative expense $38.6 $45.4 $40.7 $44.3 $52.8 $49.9 $53.5 $55.1 $54.4 Stock‐based compensation (7.2) (7.7) (7.4) (7.8) (8.2) (9.9) (9.9) (9.9) (9.8) Non‐GAAP gen
Slide 26: GAAP to Non-GAAP Reconciliations (Continued)
GAAP to Non-GAAP Reconciliations (Continued) ($ in millions) Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Q3'23 Q4'23 Q1'24 GAAP provision for (benefit from) income taxes $(8.1) $2.4 $27.3 $9.2 $21.3 $27.6 $(0.3) $95.2 $39.5 Tax adjustments related to the above 41.7 39.1 27.8 63.6 38.5 35.0 67.6 (13.0) 30.3
Slide 27: Fortinet
F=SRTINET.