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Fortinet (FTNT) 6 Aug 24 2024 Q2 Earnings call transcript

AInvestWednesday, Aug 7, 2024 7:08 pm ET
1min read

Fortinet's Q2 2024 earnings call highlighted the company's strong execution, achieving a record operating margin of 35% and revenue growth of 11%. CEO Ken Xie emphasized Fortinet's leading position in the shift to networking and security convergence, with secure networking set to surpass traditional networking by 2026. The company's focus on Unified SASE and Secure Operations (SecOps) is expected to position it as a leader in the SASE market.

Operational Highlights

Fortinet's Q2 2024 results showcased a balanced approach to growth and profitability, with record operating margins and revenue building within the high end of the guidance range. The company's operating margin increased by 820 basis points, reaching 35%, while revenue grew by 11% to $1.434 billion. Additionally, Fortinet added 6,300 new logos and continued to invest in its channel partners.

Strategic Acquisitions and Market Positioning

Fortinet's strategic acquisitions of Lacework, a next-generation cloud-native SASE data protection platform, and [indiscernible], an AI-driven cloud native application protection platform, are expected to strengthen the company's position in the SASE and stand-alone enterprise data loss prevention markets. Fortinet's position in the Gartner Magic Quadrant for single-vendor SASE, network firewall, SD-WAN, secure service edge, and enterprise wide and wireless infrastructure, further underscores its market leadership.

Focus on Unified SASE and Secure Operations

Fortinet's Unified SASE accounted for 23% of total billings in the second quarter, reflecting the company's commitment to delivering a comprehensive SASE solution. The company's focus on Secure Operations, backed by over a decade of AI experience, offers a broad range of sensors and advanced analytics to identify cyber threats. Fortinet's AI-driven Secure Ops accounted for 10% of total billings, highlighting the company's expertise in AI-powered cybersecurity solutions.

Outlook and Guidance

Fortinet expects to continue its strong performance into the third quarter of 2024, with revenue projected to grow by 10.5% and billings in the range of $1.445 billion to $1.505 billion. The company's outlook for the full year remains positive, with revenue projected to reach $5.800 billion to $5.900 billion, representing a 10% year-over-year growth. Fortinet's guidance for non-GAAP gross and operating margins, and non-GAAP earnings per share, reflects the company's confidence in its strategic initiatives and market positioning.

Conclusion

Fortinet's Q2 2024 earnings call demonstrated the company's strong execution and strategic positioning in the cybersecurity market. With a focus on Unified SASE, Secure Operations, and strategic acquisitions, Fortinet is well-positioned to capitalize on market trends and maintain its market leadership. The company's record operating margin, revenue growth, and guidance for the third quarter and full year underscore its commitment to delivering value to shareholders and customers. Fortinet's innovative solutions and strategic investments in AI-driven cybersecurity are expected to drive its growth and success in the future.

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