Fortinet, Inc. (FTNT) Bundle
A Brief History of Fortinet
Fortinet, Inc. was founded in 2000 by brothers Ken and Michael Xie. The company specializes in cybersecurity solutions and is recognized for its innovative approach to network security.
Initial Public Offering (IPO)
Fortinet went public on November 18, 2009, trading on the NASDAQ under the ticker symbol FTNT. The IPO raised approximately $156 million, with shares priced at $12 each.
Product Development and Growth
Fortinet rapidly expanded its product offerings, introducing its flagship FortiGate firewall in 2002. This product became a cornerstone of the company's portfolio, providing integrated security solutions that combine firewall, VPN, and intrusion prevention functionalities.
Financial Performance and Key Metrics
As of September 30, 2024, Fortinet reported total revenue of $4.30 billion for the nine months ended September 30, 2024, an increase of 10% from $3.89 billion in the same period in 2023. The breakdown of revenue is as follows:
| Revenue Type | 2024 (in millions) | 2023 (in millions) | Change (%) |
|---|---|---|---|
| Product Revenue | $1,334.7 | $1,439.2 | -7% |
| Service Revenue | $2,961.0 | $2,450.5 | 21% |
| Total Revenue | $4,295.7 | $3,889.7 | 10% |
Geographic Revenue Distribution
Fortinet's revenue distribution by geography for the nine months ended September 30, 2024, is as follows:
| Region | Revenue (in millions) | Percentage of Total Revenue |
|---|---|---|
| Americas | $1,776.3 | 41% |
| EMEA | $1,703.9 | 40% |
| APAC | $815.5 | 19% |
Acquisitions
Fortinet has pursued a strategy of growth through acquisitions, including the purchase of Lacework and Next DLP in 2024, which significantly contributed to its service revenue.
Operating Expenses
For the nine months ended September 30, 2024, Fortinet's operating expenses totaled $2.22 billion, compared to $2.11 billion in 2023, reflecting a 5% increase. The breakdown of operating expenses is as follows:
| Expense Type | 2024 (in millions) | 2023 (in millions) | Change (%) |
|---|---|---|---|
| Research and Development | $525.7 | $461.3 | 14% |
| Sales and Marketing | $1,518.3 | $1,498.6 | 1% |
| General and Administrative | $182.7 | $156.2 | 17% |
Net Income and Profitability
For the nine months ended September 30, 2024, Fortinet reported a net income of $1.22 billion, compared to $836.9 million for the same period in 2023, marking a significant increase in profitability.
Deferred Revenue and Future Growth
As of September 30, 2024, Fortinet's deferred revenue stood at $6.01 billion, up from $5.29 billion at the end of the previous year, reflecting strong demand for its subscription services.
Overall, Fortinet's strategic initiatives in product development, acquisitions, and geographic expansion have positioned the company for continued growth in the cybersecurity market.
A Who Owns Fortinet, Inc. (FTNT)
Major Shareholders
As of 2024, the ownership of Fortinet, Inc. (FTNT) is distributed among various institutional investors, individual shareholders, and company executives. The following table summarizes the major shareholders and their respective ownership percentages:
| Shareholder | Ownership Percentage | Type of Ownership |
|---|---|---|
| The Vanguard Group, Inc. | 8.1% | Institutional Investor |
| BlackRock, Inc. | 7.5% | Institutional Investor |
| Ken Xie | 5.0% | Executive Officer |
| State Street Corporation | 4.3% | Institutional Investor |
| FMR LLC (Fidelity) | 3.9% | Institutional Investor |
| Other Institutions | 30.0% | Various Institutions |
| Retail Investors | 31.2% | Individual Shareholders |
Stock Performance
Fortinet's stock performance has shown significant volatility over the past year. As of September 30, 2024, the closing price of FTNT was $54.99, reflecting a year-to-date increase of approximately 12%. The following table provides detailed stock performance metrics:
| Metric | Value |
|---|---|
| Current Share Price | $54.99 |
| 52-Week High | $61.50 |
| 52-Week Low | $45.00 |
| Market Capitalization | $14.5 billion |
| Shares Outstanding | 765 million |
| Dividend Yield | 0% |
Recent Developments
Fortinet has been actively engaged in stock repurchase programs, with a total of $8.25 billion authorized for repurchase through February 28, 2026. As of November 8, 2024, approximately $2.03 billion remains available for future repurchases.
Executive Compensation
Executive compensation has been structured to align with company performance, with Ken Xie, the CEO, receiving a total compensation package valued at approximately $10 million for 2024, which includes salary, bonuses, and stock options.
Institutional Ownership Trends
Institutional ownership has increased over the past year, reflecting growing confidence in Fortinet's financial performance and market position. The following table summarizes the changes in institutional ownership percentage over the last year:
| Institution | Ownership Percentage (2023) | Ownership Percentage (2024) |
|---|---|---|
| The Vanguard Group, Inc. | 7.5% | 8.1% |
| BlackRock, Inc. | 6.8% | 7.5% |
| State Street Corporation | 4.0% | 4.3% |
| FMR LLC (Fidelity) | 3.5% | 3.9% |
Conclusion on Ownership Structure
The ownership structure of Fortinet, Inc. is characterized by a mix of institutional investors, retail shareholders, and company executives. This diverse ownership base supports Fortinet's strategic initiatives and long-term growth objectives, ensuring alignment with shareholder interests.
Fortinet, Inc. (FTNT) Mission Statement
Overview of Mission Statement
Fortinet, Inc. aims to deliver comprehensive cybersecurity solutions that provide enterprises with a unified security architecture. The company focuses on enabling organizations to protect their digital assets through innovative technology and a commitment to operational excellence.
Financial Performance
As of September 30, 2024, Fortinet reported total revenue of $1.51 billion for the third quarter, representing a 13% increase year-over-year. For the nine months ended September 30, 2024, total revenue reached $4.30 billion, up by 10% compared to the same period in the previous year.
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Total Revenue | $1.51 billion | $1.33 billion | $4.30 billion | $3.89 billion |
| Service Revenue | $1.03 billion | $868.7 million | $2.96 billion | $2.45 billion |
| Product Revenue | $473.9 million | $465.9 million | $1.33 billion | $1.44 billion |
Gross Profit and Margin
Fortinet's gross profit for the three months ended September 30, 2024 was $1.24 billion, with a gross margin of 82.5%, an increase of 6.3 percentage points compared to the same period last year. For the nine months, gross profit stood at $3.45 billion, with a gross margin of 80.4%.
Operating Income
The company reported an operating income of $470.9 million for Q3 2024, marking a 55% increase year-over-year. For the nine-month period, operating income was $1.23 billion, up by 44%.
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Operating Income | $470.9 million | $303.2 million | $1.23 billion | $855.7 million |
| Operating Margin | 31.2% | 22.7% | 28.6% | 22.0% |
Deferred Revenue
As of September 30, 2024, Fortinet's deferred revenue amounted to $6.01 billion, indicating a strong pipeline for future revenue recognition. Short-term deferred revenue was $3.08 billion, reflecting an increase of 8% from December 31, 2023.
Cash Flow and Investments
Cash flows from operating activities for the nine months ended September 30, 2024 were reported at $1.78 billion, an increase of 2% year-over-year. As of September 30, 2024, Fortinet held cash, cash equivalents, and marketable securities totaling $3.70 billion.
| Metric | Value |
|---|---|
| Cash, Cash Equivalents, and Marketable Securities | $3.70 billion |
| Deferred Revenue | $6.01 billion |
| Cash Flows from Operating Activities | $1.78 billion |
Geographic Revenue Distribution
Fortinet's revenue is geographically diversified, with the Americas contributing 41%, EMEA 40%, and APAC 19% to total revenue in Q3 2024. Each region saw significant growth compared to the previous year.
| Region | Q3 2024 Revenue Contribution | Q3 2023 Revenue Contribution |
|---|---|---|
| Americas | 41% | 41% |
| EMEA | 40% | 38% |
| APAC | 19% | 21% |
Recent Acquisitions
In August 2024, Fortinet completed the acquisition of Lacework and Next DLP, enhancing its cloud security offerings. Revenue from these acquisitions for the period from August to September 2024 was approximately $13.8 million.
How Fortinet, Inc. (FTNT) Works
Business Model
Fortinet, Inc. primarily sells its security solutions through a network of distributors and managed security service providers (MSSPs), as well as directly to enterprise customers. Their offerings include hardware products, software licenses, and cloud-delivered solutions. The company invoices customers at the time of sale, typically offering standard payment terms of no more than 60 days.
Financial Performance
As of September 30, 2024, Fortinet reported:
- Total revenue of $1.51 billion for Q3 2024, a 13% increase compared to $1.33 billion in Q3 2023.
- Total revenue of $4.30 billion for the nine months ended September 30, 2024, a 10% increase from $3.89 billion in the same period last year.
| Q3 2024 | Q3 2023 | Change (%) | |
|---|---|---|---|
| Total Revenue | $1.51 billion | $1.33 billion | 13% |
| Product Revenue | $473.9 million | $465.9 million | 2% |
| Service Revenue | $1.03 billion | $868.7 million | 19% |
Revenue Breakdown
For the three and nine months ended September 30, 2024, revenue was categorized as follows:
| Category | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Product | $473.9 million | $465.9 million | $1.33 billion | $1.44 billion |
| Service | $1.03 billion | $868.7 million | $2.96 billion | $2.45 billion |
Cost of Revenue and Gross Margin
For the three months ended September 30, 2024, Fortinet reported:
- Total cost of revenue was $263.4 million, down 17% from $317.7 million in Q3 2023.
- Total gross margin increased to 82.5%, compared to 76.2% in Q3 2023.
| Cost Breakdown | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Cost of Product Revenue | $136.1 million | $198.3 million | (31%) |
| Cost of Service Revenue | $127.3 million | $119.4 million | 7% |
Operating Income and Expenses
As of September 30, 2024:
- Operating income was $470.9 million for Q3 2024, representing a 55% increase from $303.2 million in Q3 2023.
- Operating margin was 31.2%, up from 22.7% in Q3 2023.
| Operating Expenses | Q3 2024 | Q3 2023 |
|---|---|---|
| Research and Development | $21.9 million | $20.0 million |
| Sales and Marketing | $27.0 million | $28.5 million |
| General and Administrative | $10.7 million | $9.9 million |
Deferred Revenue
As of September 30, 2024, Fortinet's deferred revenue totaled $6.01 billion, an increase of 5% from December 31, 2023. Short-term deferred revenue was $3.08 billion, up 8% from the previous year.
Cash Flow and Investments
During the nine months ended September 30, 2024:
- Net cash provided by operating activities was $1.78 billion.
- Free cash flow was $571.8 million.
| Cash Flow Metrics | 9M 2024 | 9M 2023 |
|---|---|---|
| Net Cash Provided by Operating Activities | $1.78 billion | $1.74 billion |
| Free Cash Flow | $571.8 million | $481.1 million |
Recent Acquisitions
Fortinet completed the acquisition of Lacework and Next DLP in August 2024, contributing $13.8 million to revenue in the following months.
Market Performance
As of September 30, 2024, Fortinet's stock value exhibited a robust performance, with a market capitalization reflecting significant investor confidence. The company maintained a share repurchase program with $1.03 billion remaining for future buybacks.
How Fortinet, Inc. (FTNT) Makes Money
Revenue Breakdown
As of September 30, 2024, Fortinet reported total revenue of $1.51 billion for the three months and $4.30 billion for the nine months, reflecting a growth of 13% and 10% year-over-year, respectively. The revenue is composed of:
| Revenue Type | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | 9M 2024 Revenue (in millions) | 9M 2023 Revenue (in millions) |
|---|---|---|---|---|
| Product Revenue | $473.9 | $465.9 | $1,334.7 | $1,439.2 |
| Service Revenue | $1,034.2 | $868.7 | $2,961.0 | $2,450.5 |
| Total Revenue | $1,508.1 | $1,334.6 | $4,295.7 | $3,889.7 |
Service Revenue Growth
The service revenue, which includes security subscriptions and technical support, saw significant growth:
- Security subscription revenue increased by 20% in Q3 2024, totaling $595.8 million.
- Technical support and other services revenue increased by 17%, totaling $438.4 million.
Deferred Revenue
As of September 30, 2024, Fortinet's deferred revenue stood at $6.01 billion, up from $5.29 billion in the previous year. This includes:
- Short-term deferred revenue of $3.08 billion.
- Recognition of $660.3 million in service revenue from deferred revenue in Q3 2024.
Cost Structure and Gross Margin
Fortinet's total cost of revenue for Q3 2024 was $263.4 million, down from $317.7 million in Q3 2023. The gross margins for the respective periods were:
| Margin Type | Q3 2024 Gross Margin (%) | Q3 2023 Gross Margin (%) |
|---|---|---|
| Product Gross Margin | 71.3% | 57.4% |
| Service Gross Margin | 87.7% | 86.3% |
| Total Gross Margin | 82.5% | 76.2% |
Operating Income and Expenses
Fortinet reported an operating income of $470.9 million for Q3 2024, a significant increase from $303.2 million in Q3 2023. Operating expenses for the respective periods were:
| Expense Type | Q3 2024 Expense (in millions) | Q3 2023 Expense (in millions) |
|---|---|---|
| Research and Development | $187.3 | $156.9 |
| Sales and Marketing | $515.9 | $504.4 |
| General and Administrative | $71.7 | $53.5 |
| Total Operating Expenses | $773.8 | $713.7 |
Geographic Revenue Distribution
Fortinet's revenue is diversified across regions as follows for Q3 2024:
| Region | Revenue (in millions) | Percentage of Total Revenue |
|---|---|---|
| Americas | $624.0 | 41% |
| EMEA | $599.3 | 40% |
| APAC | $284.8 | 19% |
Cash Flow and Investments
During the nine months ended September 30, 2024, cash flows from operating activities were $1.78 billion. Fortinet’s cash, cash equivalents, and investments totaled $3.70 billion as of September 30, 2024.
Market Position and Strategic Acquisitions
Fortinet has been active in expanding its market position through acquisitions. Notably, in August 2024, it acquired Lacework and Next DLP, contributing $13.8 million to revenue in the subsequent months.
Fortinet, Inc. (FTNT) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- Fortinet, Inc. (FTNT) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Fortinet, Inc. (FTNT)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Fortinet, Inc. (FTNT)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.