Fortinet reports second quarter 2024 financial results

• Record quarterly generally accepted accounting principles (GAAP) and non-GAAP operating margins. 

• Raises 2024 revenue and non-GAAP operating margin guidance. 

• Continuing to invest in the fast-growing unified secure access service edge (SASE) and security operations markets. 

Second quarter 2024 highlights 

• Total revenue of US$1.43 billion, up 11 per cent year over year. 

• Service revenue of US$982 million, up 20 per cent year over year. 

• Record GAAP operating margin of 30.5 per cent. 

• Record non-GAAP operating margin of 35.1 per cent. 

• Cash flow from operations of US$342 million. 

Fortinet® (Nasdaq: FTNT), a global cybersecurity leader driving the convergence of networking and security, has announced financial results for the second quarter ended June 30, 2024. 

Ken Xie, founder, chairman, and chief executive officer, Fortinet, said, “In the second quarter, we successfully balanced growth and profitability as our non-GAAP operating margin increased 820 basis points year-over-year to a company record of 35.1 per cent, while billings and revenue were at the high end of their respective guidance ranges. 

“We are continuing to execute our strategy to invest in the fast-growing unified SASE and security operations markets, while gaining market share in secure networking. We expect to emerge as a SASE leader, as we are the only vendor in the Gartner Magic Quadrant™ for Single-Vendor SASE that is also recognised in five different network security Magic Quadrant™ reports (1).” 

Financial highlights for the second quarter of 2024 

• Revenue: Total revenue was US$1.43 billion for the second quarter of 2024, an increase of 10.9 per cent compared to US$1.29 billion for the same quarter of 2023. 

• Product revenue: Product revenue was US$451.9 million for the second quarter of 2024, a decrease of 4.4 per cent compared to US$472.6 million for the same quarter of 2023. 

• Service revenue: Service revenue was US$982.4 million for the second quarter of 2024, an increase of 19.8 per cent compared to US$820.2 million for the same quarter of 2023. 

• Billings: Total billings were US$1.54 billion for the second quarter of 2024, remaining flat compared to US$1.54 billion for the same quarter of 2023. 

• Deferred revenue: Total deferred revenue was US$5.90 billion as of June 30, 2024, an increase of 15.0 per cent compared to US$5.13 billion as of June 30, 2023. 

• GAAP operating income and margin: GAAP operating income was US$437.2 million for the second quarter of 2024, representing a GAAP operating margin of 30.5 per cent. GAAP operating income was US$279.0 million for the same quarter of 2023, representing a GAAP operating margin of 21.6 per cent. 

• Non-GAAP operating income and margin: Non-GAAP operating income was US$503.6 million for the second quarter of 2024, representing a non-GAAP operating margin of 35.1 per cent. Non-GAAP operating income was US$348.1 million for the same quarter of 2023, representing a non-GAAP operating margin of 26.9 per cent. 

• GAAP net income and diluted net income per share: GAAP net income was US$379.8 million for the second quarter of 2024, compared to GAAP net income of US$266.3 million for the same quarter of 2023. GAAP diluted net income per share was US$0.49 for the second quarter of 2024, based on 769.9 million diluted weighted-average shares outstanding, compared to GAAP diluted net income per share of US$0.33 for the same quarter of 2023, based on 795.9 million diluted weighted-average shares outstanding. 

• Non-GAAP net income and diluted net income per share: Non-GAAP net income was US$439.9 million for the second quarter of 2024, compared to non-GAAP net income of US$300.4 million for the same quarter of 2023. Non-GAAP diluted net income per share was US$0.57 for the second quarter of 2024, based on 769.9 million diluted weighted-average shares outstanding, compared to US$0.38 for the same quarter of 2023, based on 795.9 million diluted weighted-average shares outstanding. 

• Cash flow: Cash flow from operations was US$342.0 million for the second quarter of 2024, compared to US$515.1 million for the same quarter of 2023. 

• Free cash flow: Free cash flow was US$318.9 million for the second quarter of 2024, compared to US$438.3 million for the same quarter of 2023. 

Guidance 

For the third quarter of 2024, Fortinet currently expects: 

• Revenue in the range of US$1.445 billion to US$1.505 billion. 

• Billings in the range of US$1.530 billion to US$1.600 billion. 

• Non-GAAP gross margin in the range of 79.0 per cent to 80.0 per cent. 

• Non-GAAP operating margin in the range of 30.5 per cent to 31.5 per cent. 

• Diluted non-GAAP net income per share in the range of US$0.56 to US$0.58, assuming a non-GAAP effective tax rate of 17 per cent. This assumes a diluted share count of 767 million to 777 million. 

For the fiscal year 2024, Fortinet currently expects: 

• Revenue in the range of US$5.800 billion to US$5.900 billion. 

• Service revenue in the range of US$3.975 billion to US$4.025 billion. 

• Billings in the range of US$6.400 billion to US$6.600 billion. 

• Non-GAAP gross margin in the range of 79.0 per cent to 80.0 per cent. 

• Non-GAAP operating margin in the range of 30.0 per cent to 31.5 per cent. 

• Diluted non-GAAP net income per share in the range of US$2.13 to US$2.19, assuming a non-GAAP effective tax rate of 17 per cent. This assumes a diluted share count of 767 million to 777 million. 

These statements are forward looking and actual results may differ materially.  

Our guidance with respect to non-GAAP financial measures excludes stock-based compensation, amortisation of acquired intangible assets, gain on intellectual property matters and non-cash charge on equity method investment of impairment. We have not reconciled our guidance with respect to non-GAAP financial measures to the corresponding GAAP measures because certain items that impact these measures are uncertain or out of our control, or cannot be reasonably predicted. Accordingly, a reconciliation of these non-GAAP financial measures to the corresponding GAAP measures is not available without unreasonable effort. 

GARTNER is a registered trademark and service mark of Gartner and Magic Quadrant is a registered trademark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and are used herein with permission. All rights reserved. 

Gartner does not endorse any vendor, product or service depicted in our research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner research organisation and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose. 

(1) Magic Quadrant for SD-WAN, Jonathan Forest, Naresh Singh, Andrew Lerner, Karen Brown, Published 27 September 2023 

Magic Quadrant for Enterprise Wired and Wireless LAN Infrastructure, Tim Zimmerman, Christian Canales, Nauman Raja, Mike Leibovitz, Published 06 March 2024 

Magic Quadrant for Network Firewalls, Rajpreet Kaur, Adam Hils, Thomas Lintemuth, Published 19 December 2022 

Magic Quadrant for Security Service Edge, Charlie Winckless, Thomas Lintemuth, Dale Koeppen, Published 15 April 2024 

Magic Quadrant for Single-Vendor SASE, Andrew Lerner, Jonathan Forest, Neil MacDonald, Nat Smith, Charlie Winckless, Published 16 August 2023 

About Fortinet 
Fortinet (NASDAQ: FTNT) is a driving force in the evolution of cybersecurity and the convergence of networking and security. Our mission is to secure people, devices, and data everywhere, and today we deliver cybersecurity everywhere you need it with the largest integrated portfolio of over 50 enterprise-grade products. Well over half a million customers trust Fortinet’s solutions, which are among the most deployed, most patented, and most validated in the industry. The Fortinet Training Institute, one of the largest and broadest training programs in the industry, is dedicated to making cybersecurity training and new career opportunities available to everyone. Collaboration with high-profile, well-respected organisations from both the public and private sectors, including CERTs, government entities, and academia, is a fundamental aspect of Fortinet’s commitment to enhance cyber resilience globally. FortiGuard Labs, Fortinet’s elite threat intelligence and research organisation, develops and utilises leading-edge machine learning and AI technologies to provide customers with timely and consistently top-rated protection and actionable threat intelligence. Learn more at https://www.fortinet.com, the Fortinet blog, and FortiGuard Labs. 

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