Company Announcement - Record billings growth of 41% year over year

• Billings of $299.6 million, up 41% year over year1
• Revenue of $260.1 million, up 35% year over year
• Non-GAAP diluted net income per share of $0.141
• Cash flow from operations of $65.1 million
• Free cash flow of $51.7 million1
• Cash, cash equivalents and investments of $1.17 billion
• Deferred revenue of $706.9 million, up 41% year over year

Fortinet®, a global leader in high performance cyber security solutions, today announced financial results for the third quarter ended September 30, 2015.

“For the third consecutive quarter this year, Fortinet accelerated billings growth to record levels, delivering 41% billings growth - the highest ever as a public company,” said Ken Xie, founder, chairman and chief executive officer.  “Additionally, we delivered non-GAAP operating margin and earnings per share upside to shareholders.  We are executing well and our investment strategy is working. Fortinet remains well-positioned to gain market share globally due to our strong competitive technology position and best-in-class end-to-end network security solutions portfolio, as well as the ongoing success of our land and expand strategy.”

Financial Highlights for the Third Quarter of 2015

Billings1: Total billings were $299.6 million for the third quarter of 2015, an increase of 41% compared to $213.2 million in the same quarter of 2014. 

Revenue: Total revenue was $260.1 million for the third quarter of 2015, an increase of 35% compared to $193.3 million in the same quarter of 2014.  Within total revenue, product revenue was $119.7 million, an increase of 36% compared to $87.7 million in the same quarter of 2014.  Service revenue was $140.3 million, an increase of 33% compared to $105.6 million in the same quarter of 2014. 

Deferred Revenue: Total deferred revenue was $706.9 million as of September 30, 2015, an increase of $49.4 million compared to $657.6 million as of June 30, 2015.

Cash and Cash Flow2: As of September 30, 2015, cash, cash equivalents and investments were $1.17 billion, compared to $1.15 billion as of June 30, 2015. In the third quarter of 2015, cash flow from operations was $65.1 million compared to $56.5 million in the same quarter of 2014. Free cash flow1 was $51.7 million during the third quarter of 2015 compared to $50.7 million in the same quarter of 2014.

GAAP Operating Income or Loss: GAAP operating loss was $1.8 million for the third quarter of 2015, representing a GAAP operating margin of -0.7%. GAAP operating income was $15.5 million for the same quarter of 2014, representing a GAAP operating margin of 8%. 

GAAP Net Income and Diluted Net Income Per Share: GAAP net income was $8.2 million for the third quarter of 2015, compared to GAAP net income of $4.1 million for the same quarter of 2014. GAAP diluted net income per share was $0.05 for the third quarter of 2015, compared to $0.02 for the same quarter of 2014.

Non-GAAP Operating Income1: Non-GAAP operating income was $36.4 million for the third quarter of 2015, representing a non-GAAP operating margin of 14%. Non-GAAP operating income was $30.4 million for the same quarter of 2014, representing a non-GAAP operating margin of 16%. 

Non-GAAP Net Income and Diluted Net Income Per Share1: Non-GAAP net income was $24.1 million for the third quarter of 2015, compared to non-GAAP net income of $20.0 million for the same quarter of 2014.  Non-GAAP diluted net income per share was $0.14 for the third quarter of 2015, compared to $0.12 for the same quarter of 2014.

• 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.”
• During the third quarter of 2015, there were no shares repurchased under our share repurchase program.