Slide 1: Q2 2023 Financial Results
Q2 2023 Financial Results August 3, 2023
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 2023 guidance, and future prospects and expectations are forward-looking statements that involve ri
Slide 3: Q2 2023 Non-GAAP Results
Q2 2023 Non-GAAP Results Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Billings (1) $960.9M $1.064B $1.306B $1.160B $1.304B $1.411B $1.719B $1.503B $1.541B Y/Y % Change 35.1% 41.9% 35.9% 36.4% 35.7% 32.6% 31.6% 29.6% 18.1% Revenue $801.1M $867.2M $963.6M $954.8M $1.030B $1.150B $1.283B $1.26
Slide 4: Q2 2023 Non-GAAP Results
Q2 2023 Non-GAAP Results Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Gross Profit (1) $621.2M $663.8M $744.4M $710.2M $788.5M $875.5M $996.0M $963.6M $1.01B Gross Margin (1) 77.5% 76.5% 77.3% 74.4% 76.5% 76.2% 77.6% 76.3% 77.9% Operating Income (1)(2) $203.3M $223.6M $274.7M $210.2M $255.4
Slide 5: Revenue by Geography
Revenue by Geography Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Y/Y % Y/Y % Y/Y % Y/Y % Y/Y % Y/Y % Y/Y % Y/Y % Y/Y % ($ in millions) $ $ $ $ $ $ $ $ $ Change Change Change Change Change Change Change Change Change Americas $337.0 29.1% $350.1 28.5% $380.8 26.4% $382.6 31.5% $413.6 22.7%
Slide 6: Number of Deals & FortiGate Sales
Number of Deals & FortiGate Sales Number of Deals (1) Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 No. of Deals >$50K 2,856 3,021 3,807 3,241 3,583 4,269 4,904 4,583 4,790 No. of Deals >$250K 499 548 758 598 699 830 1,008 838 836 No. of Deals >$500K 203 232 320 243 312 355 450 323 353 No. o
Slide 7: Statement of Cash Flows (Non-GAAP)
Statement of Cash Flows (Non-GAAP) ($ in millions) Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 GAAP Net Income Including Non-controlling Interests $137.5 $163.2 $198.8 $138.3 $173.4 $231.1 $313.8 $247.7 $266.3 Depreciation, Amortization and Stock-Based Compensation 71.5 75.6 78.4 78.7 79.8
Slide 8: Free Cash Flow and Adjusted Free Cash Flow Growth (Non-GAAP)
Free Cash Flow and Adjusted Free Cash Flow Growth (Non-GAAP) $662.1 ($ in millions) $509.8 $497.7 $463.8 $402.8 $386.9 $366.2 $344.5 (1) $304.7 $647.2 Reported Free Cash Flow Real Estate Related Add Backs (2) $497.2 $438.3 $394.7 $395.2 $329.8 $273.5 $283.5 $215.5 (3) Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q
Slide 9: LTM Adjusted Free Cash Flow
LTM Adjusted Free Cash Flow $2,133 ($ in millions) $1,940 $1,645 $1,479 $1,402 (1), (2) LTM Adj FCF Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 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 Ca
Slide 10: Y/Y Billings & Revenue Growth Rates and Operating Margin: 2010 - H1'23
Y/Y Billings & Revenue Growth Rates and Operating Margin: 2010 - H1'23 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 H1'23 GAAP Operating Margin Non-GAAP Operating Margin Billings Growth Revenue Growth Note: 2010-2015 have not been adjusted fo
Slide 11: Q3 and 2023 Guidance (Non-GAAP)
Q3 and 2023 Guidance (Non-GAAP)(1) Actual Q3'23E Actual 2022 2023E Q3'22 Billings (2) $1.411B $1.560 - 1.620B $5.594B $6.490 - 6.590B Y/Y Mid-Pt Growth 12.7% 16.9% Revenue (GAAP) $1.150B $1.315 - 1.375B $4.417B $5.350 - 5.450B Y/Y Mid-Pt Growth 17.0% 22.3% Service Revenue (GAAP) $680.8M $2.637B $3.3
Slide 12: Additional Modeling Points
Additional Modeling Points Actual Actual Q3’23E Q4’23E 2023E Q1'23 Q2'23 Cash Paid for Taxes $21M $38M(1) $25M $376M(1) $460M Capital Expenditures $30M $77M $100 - $130M $130 - $150M $335 - $385M Non-GAAP Tax Rate 17% 17% 17% 17% 17% Notes (1) Payment of 2023 estimated Federal tax and other tax paym
Slide 13: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations ($ in millions) Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 Total revenue $801.1 $867.2 $963.6 $954.8 $1,030.1 $1,149.5 $1,283.0 $1,262.3 $1,292.8 Add: Change in deferred revenue 159.8 201.0 346.5 205.0 274.1 261.5 446.8 240.6 247.7 Less: Deferred revenue b
Slide 14: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations ($ in millions) Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 GAAP product gross profit $182.7 $202.8 $232.4 $210.0 $245.5 $283.5 $350.2 $307.1 $298.1 Stock-based compensation 0.5 0.4 0.4 0.4 0.4 0.5 0.4 0.4 0.5 Amortization of acquired intangible assets 0.9
Slide 15: GAAP to Non-GAAP Reconciliations (Continued)
GAAP to Non-GAAP Reconciliations (Continued) ($ in millions) Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 GAAP general and administrative expense $34.4 $35.8 $41.3 $38.6 $45.4 $40.7 $44.3 $52.8 $49.9 Stock-based compensation (7.0) (6.9) (6.9) (7.2) (7.7) (7.4) (7.8) (8.2) (9.9) Non-GAAP gen
Slide 16: GAAP to Non-GAAP Reconciliations (Continued)
GAAP to Non-GAAP Reconciliations (Continued) ($ in millions) Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'23 Q2'23 GAAP provision for (benefit from) income taxes $7.5 $(9.3) $3.7 $(8.1) $2.4 $27.3 $9.2 $21.3 $27.6 Tax adjustments related to the above 34.6 54.2 52.4 41.7 39.1 27.8 63.6 38.5 35.0 Non-
Slide 17: Fortinet
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