Fortinet Reports Fourth Quarter and Full Year 2016 Financial Results
Fortinet® (NASDAQ: FTNT), a global leader in high performance cyber security solutions, today announced financial results for the fourth quarter and full year ended December 31, 2016.
“We are pleased with our strong finish to 2016, demonstrating our strong technology advantage and revenue growth,” said Ken Xie, founder, chairman and chief executive officer. “Our ability to provide a broad, powerful, and automated Security Fabric that protects all points in the network, from IoT to cloud, sets Fortinet apart. This technology advantage, combined with improvements in sales execution delivered strong results in the mid to large enterprise segments of the market and positions us well for future growth.”
Financial Highlights for the Fourth Quarter of 2016
Revenue: Total revenue was $362.8 million for the fourth quarter of 2016, an increase of 22% compared to $296.5 million in the same quarter of 2015. Within total revenue, product revenue was $158.9 million, an increase of 10% compared to $144.8 million in the same quarter of 2015. Service revenue was $203.9 million, an increase of 34% compared to $151.8 million in the same quarter of 2015.
Billings1: Total billings were $463.4 million for the fourth quarter of 2016, an increase of 22% compared to $380.9 million in the same quarter of 2015.
Deferred Revenue: Total deferred revenue was $1.04 billion as of December 31, 2016, an increase of 31% compared to $791.3 million as of December 31, 2015. Total deferred revenue increased by $100.6 million compared to $934.8 million as of September 30, 2016.
Cash2 and Cash Flow: As of December 31, 2016, cash, cash equivalents and investments were $1.31 billion, compared to $1.27 billion as of September 30, 2016. In the fourth quarter of 2016, cash flow from operations was $101.0 million compared to $68.6 million in the same quarter of 2015. Free cash flow1 was $84.2 million during the fourth quarter of 2016 compared to $60.2 million in the same quarter of 2015.
GAAP Operating Income: GAAP operating income was $45.2 million for the fourth quarter of 2016, representing a GAAP operating margin of 12%. GAAP operating income was $12.9 million for the same quarter of 2015, representing a GAAP operating margin of 4%.
Non-GAAP Operating Income1: Non-GAAP operating income was $81.1 million for the fourth quarter of 2016, representing a non-GAAP operating margin of 22%. Non-GAAP operating income was $47.6 million for the same quarter of 2015, representing a non-GAAP operating margin of 16%.
GAAP Net Income or Loss and Diluted Net Income or Loss Per Share: GAAP net income was $25.2 million for the fourth quarter of 2016, compared to GAAP net loss of $2.5 million for the same quarter of 2015. GAAP diluted net income per share was $0.14 for the fourth quarter of 2016, compared to GAAP diluted net loss per share of $0.01 for the same quarter of 2015.
Non-GAAP Net Income and Diluted Net Income Per Share1: Non-GAAP net income was $53.2 million for the fourth quarter of 2016, compared to non-GAAP net income of $32.4 million for the same quarter of 2015. Non-GAAP diluted net income per share was $0.30 for the fourth quarter of 2016, compared to $0.18 for the same quarter of 2015.
Financial Highlights for the Full Year 2016
Revenue: Total revenue was $1.28 billion for 2016, an increase of 26% compared to $1.01 billion in 2015. Within total revenue, product revenue was $548.1 million, an increase of 15% compared to $476.8 million in 2015. Service revenue was $727.3 million, an increase of 37% compared to $532.5 million in 2015.
Billings1: Total billings were $1.52 billion for 2016, an increase of 23% compared to $1.23 billion in 2015.
Cash Flow: In 2016, cash flow from operations was $345.7 million compared to $282.5 million in 2015. Free cash flow1 was $278.5 million in 2016 compared to $245.2 million in 2015.
GAAP Operating Income: GAAP operating income was $42.9 million for 2016, representing a GAAP operating margin of 3%. GAAP operating income was $14.9 million for 2015, representing a GAAP operating margin of 1%.
Non-GAAP Operating Income1: Non-GAAP operating income was $193.1 million for 2016, representing a non-GAAP operating margin of 15%. Non-GAAP operating income was $133.3 million for 2015, representing a non-GAAP operating margin of 13%.
GAAP Net Income and Diluted Net Income Per Share: GAAP net income was $32.2 million for 2016, compared to GAAP net income of $8.0 million for 2015. GAAP diluted net income per share was $0.18 for 2016, compared to $0.05 for 2015.
Non-GAAP Net Income and Diluted Net Income Per Share1: Non-GAAP net income was $129.5 million for 2016, compared to non-GAAP net income of $89.4 million for 2015. Non-GAAP diluted net income per share was $0.73 for 2016, compared to $0.51 for 2015.
1 A reconciliation of GAAP to non-GAAP financial and liquidity 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 During the fourth quarter and year ended December 31, 2016, we repurchased $35.8 million and $110.8 million, respectively, of our common stock under our share repurchase program. During the fourth quarter and year ended December 31, 2015, we repurchased $60.0 million of our common stock under our share repurchase program.
