Fortinet Inc (FTNT)

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Fortinet Reports First Quarter 2012 Financial Results
Fortinet, Inc. (MM) (NASDAQ:FTNT)
Today : Tuesday 24 April 2012

•Revenues of $117.2 million, up 26% year over year


•Billings of $137.0 million, up 28% year over year


•GAAP diluted net income per share of $0.09


•Non-GAAP diluted net income per share of $0.11


•Free cash flow of $46.9 million


•Cash, cash equivalents and investments of $600.3 million, with no debt
Fortinet® (NASDAQ: FTNT) -- a leader in high-performance network security -- today announced financial results for the first quarter ended March 31, 2012.
Financial Highlights for the First Quarter of 2012
•Revenue: Total revenue was $117.2 million for the first quarter of 2012, an increase of 26% compared to $93.3 million in the same quarter of 2011. Within total revenue, product revenue was $53.2 million, an increase of 32% compared to the same quarter of 2011. Services revenue was $62.1 million, an increase of 28% compared to the same quarter of 2011.

•Billings(1): Total billings were $137.0 million for the first quarter of 2012, an increase of 28% compared to $106.7 million in the same quarter of 2011.

•Deferred Revenue: Deferred revenue was $314.6 million as of March 31, 2012, an increase of 18% compared to deferred revenue of $266.0 million as of March 31, 2011, and up $19.7 million from $294.8 million as of December 31, 2011.

•Cash and Free Cash Flow(1): As of March 31, 2012, cash, cash equivalents and investments were $600.3 million, compared to $538.7 million as of December 31, 2011. In the first quarter of 2012, free cash flow was $46.9 million.

•GAAP Operating Income: GAAP operating income was $18.7 million for the first quarter of 2012, representing a GAAP operating margin of 16%. GAAP operating income was $17.4 million for the same quarter of 2011, representing a GAAP operating margin of 19%.

•GAAP Net Income and Diluted Net Income Per Share: GAAP net income was $14.2 million for the first quarter of 2012, based on a 28% tax rate for the quarter. This compares to GAAP net income of $13.6 million for the same quarter of 2011, based on a 25% tax rate for the quarter. GAAP diluted net income per share was $0.09 for the first quarter of 2012, based on 165.8 million weighted-average diluted shares outstanding, compared to $0.08 for the same quarter of 2011, based on 162.9 million weighted-average diluted shares outstanding(2).

•Non-GAAP Operating Income(1): Non-GAAP operating income was $25.5 million for the first quarter of 2012, representing a non-GAAP operating margin of 22%. Non-GAAP operating income was $20.0 million for the same quarter of 2011, representing a non-GAAP operating margin of 21%.

•Non-GAAP Net Income and Diluted Net Income Per Share(1): Non-GAAP net income was $17.5 million for the first quarter of 2012, based on a 34% effective tax rate for the quarter. Non-GAAP net income for the same quarter of 2011 was $13.9 million, based on a 33% effective tax rate. Non-GAAP diluted net income per share was $0.11 for the first quarter of 2012 based on 165.8 million weighted-average diluted shares outstanding, compared to $0.09 for the same quarter of 2011, based on 162.9 million weighted-average diluted shares outstanding(2).
(1) A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."
(2) Effective June 1, 2011, we completed a two-for-one stock split of our outstanding shares of common stock effected in the form of a stock dividend. All prior share and per share amounts in this release have been retroactively adjusted so the stock split is reflected for all periods presented.
Management Commentary:
Ken Xie, founder, president and chief executive officer of Fortinet, stated: "The first quarter marked a strong start to the year for Fortinet, with continued demand for our core products and growing market acceptance of recently introduced products. We continue to leverage the investments we are making in our global sales organization to successfully penetrate large enterprises across all geographies, as well as take advantage of opportunities to grow in the high and low-end security markets. With a healthy pipeline of business and an exciting product lineup on tap for this year, we believe we are positioned well to continue to gain market share, as enterprises look to deploy high performance integrated network security solutions."
Ken Goldman, chief financial officer of Fortinet, stated: "We were pleased with our first quarter financial results which met or exceeded expectations across all of our key operating metrics. We achieved particularly strong growth in billings, revenue, and cash flow generation, and ended the quarter with a cash, cash equivalents and investments balance of more than $600 million and no debt. With a globally diversified business model, cutting-edge technology and a healthier economic environment, we believe we are well-positioned to continue to deliver solid growth for the remainder of the year."

Conference Call Details

Fortinet will host a conference call today, April 24, 2012, at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to discuss its financial results. To access this call, dial [phone] (domestic) or [phone] (international) with conference ID # 69744749. A live webcast of the conference call and supplemental slides will be accessible from the Investor Relations page of Fortinet's website at http://investor.fortinet.com and a replay will be archived and accessible at: http://investor.fortinet.com/events.cfm. A replay of this conference call can also be accessed through May 8, 2012, by dialing [phone] (domestic) or [phone] (international) with conference ID# 69744749.
Following Fortinet's earnings conference call, the Company will host an additional question-and-answer session at 3:30 p.m. Pacific Time (6:30 p.m. Eastern Time) to provide an opportunity for financial analysts and investors to ask more detailed product and financial questions. To access this call, dial [phone] (domestic) or [phone] (international) with conference ID # 69747844. This follow-up call will be webcast live and accessible at http://investor.fortinet.com, and a replay will be archived and available after the call at http://investor.fortinet.com/events.cfm. A replay of this conference call will also be available through May 8, 2012 by dialing [phone] (domestic) or [phone] (international) with conference ID # 69747844.