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Investors were clamoring for a piece of the cybersecurity developer Fortinet(FTNT-1.22%) this morning after the company reported impressive fourth-quarter results. Management is also optimistic about Fortinet's upcoming quarter, which contributed to the positive investor sentiment this morning
Fortinet reported non-GAAP earnings per share of $0.44 in Q4, up 76% from the year-ago period and surpassing analysts' average estimate of $0.39 per share.
Revenue rose 33% year over year, to $1.28 billion. While it was an impressive gain, the figure was slightly lower than Wall Street's consensus estimate of $1.29 billion for the quarter.
But investors didn't seem to mind that slight miss and instead focused on the company's earnings and the fact that Fortinet posted its 14th consecutive year of GAAP profitability.
Fortinet's management said on the company's earnings call that a surge in devices connected to the cloud has resulted in a boost in the company's security business. "It is no longer feasible to overlay security on top of networking in the data center. They must be deployed as a converged solution," CFO Keith Jensen said.
He added that the company is leading in the security "convergence trend" with its wide range of technologies that are embedded in its security operating system and noted that the success of the company's strategy resulted in 2022 billings climbing 34% to $5.6 billion.
And there could be more good times ahead, according to management. "Given our cost-for-performance advantage, the convergence of security and networking, and the consolidation of products and vendors, we expect to continue our solid growth trajectory," Fortinet founder and CEO Ken Xie said in a press release.
Now what
Investors were also likely very happy with Fortinet's outlook for the first quarter.
At the midpoint of guidance, management expects earnings of $0.28 per share, just ahead of analysts' average estimate of $0.27. The company's estimated revenue of $1.2 billion for the first quarter is also above Wall Street's consensus estimate of $1.18 billion.
With impressive fourth-quarter results and strong guidance for the first quarter, it's no surprise to see investors pushing up Fortinet's share price today.
Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Fortinet. The Motley Fool has a disclosure policy.
Wed, 08 Feb 2023 04:44:00 -0600Chris Neigerentext/htmlhttps://www.fool.com/investing/2023/02/08/why-fortinet-stock-is-surging-today/Killexams : Why Fortinet Stock Is Soaring After Hours
Fortinet IncFTNT shares are trading higher in Tuesday's after-hours session after the company reported mixed fourth-quarter results and issued strong guidance.
What Happened: Fortinet said fourth-quarter revenue increased 33% year-over-year to $1.28 billion, which missed consensus estimates of $1.29 billion. The cybersecurity company reported fourth-quarter adjusted earnings of 44 cents per share, which beat average analyst estimates of 39 cents per share.
Fortinet said product revenue was up 43% year-over-year, while service revenue grew 27%. Billings jumped 32% compared to the prior year's quarter.
Free cash flow reached $497.2 million during the quarter, while cash flow from operations totaled $528.1 million.
"Our market share gains are being driven by Fortinet's integrated and single platform approach to cybersecurity combined with FortiASIC technology, which lowers the management costs and the total cost of ownership for organizations," said Ken Xie, founder, chairman and CEO of Fortinet.
"Given our cost-for-performance advantage, the convergence of security and networking, and the consolidation of products and vendors, we expect to continue our solid growth trajectory."
Fortinet expects first-quarter revenue to be between $1.18 billion and $1.22 billion versus estimates of $1.18 billion. First-quarter adjusted earnings are expected to be in a range of 27 cents to 29 cents per share versus estimates of 27 cents per share.
On a full-year basis, Fortinet sees 2023 revenue between $5.37 billion and $5.43 billion versus estimates of $5.36 billion. The company sees full-year adjusted earnings in a range of $1.39 to $1.41 per share versus estimates of $1.39 per share.
Tue, 07 Feb 2023 10:48:00 -0600entext/htmlhttps://www.benzinga.com/news/earnings/23/02/30781119/why-fortinet-stock-is-soaring-after-hoursKillexams : Is It Too Late to Buy Fortinet Stock?
Fortinet's (FTNT-1.22%) stock jumped nearly 11% on Feb. 8 after the company posted its fourth-quarter earnings report. The cybersecurity company's revenue rose 33% year over year to $1.28 billion but narrowly missed analysts' estimates by $20 million. However, its adjusted earnings rose 76% to $0.44 per share and topped the consensus forecast by a nickel.
Fortinet also posted strong guidance for 2023. It expects its revenue to rise 24% to 28% year over year in the first quarter and grow 21% to 23% for the full year. Both estimates easily surpassed Wall Street's expectations.
That stable outlook suggests that Fortinet is still well insulated from the macro headwinds, but is it too late to buy its stock after its post-earnings pop? Let's take a fresh look at Fortinet's business and valuations to decide.
Image source: Getty Images.
An early mover in next-gen firewalls
Back in 2002, Fortinet launched FortiGate, a next-gen firewall that upgraded traditional firewalls with network device filtering tools. It established an early-mover's advantage in that market and now serves about 615,000 customers globally, including most of the Fortune 500. FortiGate subsequently became the foundation of Fortinet's Security Fabric, which provides end-to-end protection tools for on-premise, cloud-based, and Internet of Things devices through a blend of on-site appliances, software, and cloud-based services.
That expansion boosted Fortinet's annual revenue from $1.49 billion in 2017 to $4.42 billion in 2022, which represented a compound annual growth rate (CAGR) of 24%, as its annual adjusted operating margin expanded from 15% to 27%. Its stock has also rallied more than 550% over the past five years as the ETFMG Prime Cyber Security ETF, which holds a basket of top cybersecurity stocks, rose less than 50%.
Unlike many of its other cybersecurity peers, Fortinet is firmly profitable by both generally accepted accounting principles (GAAP) and non-GAAP (adjusted) metrics. On a non-GAAP basis, its net income increased at a CAGR of 39% from $185 million in 2017 to $962 million in 2022.
But can it maintain those growth rates?
Fortinet believes it can generate $10 billion in billings in 2025, which implies a CAGR of 21% from its $5.59 billion in billings in 2022. That forecast implies its top-line growth will barely slow down over the next three years.
During its fourth-quarter conference call, CFO Keith Jensen attributed the company's stable outlook to the "convergence and consolidation" of "network firewalls, Secure SD-WAN, 5G and OT security" into its "single operating system." Jensen also noted that Fortinet's development of its own ASIC chips, which are customized for its own hardware and operating system, gave it an edge against other cybersecurity appliance companies that used third-party chips.
Unlike many other tech companies, Fortinet didn't fret over macroeconomic headwinds at all during its latest conference call. Instead, Jensen said that even though Fortinet faced a "challenging global supply chain environment" during the year, its product revenue still rose 42% and represented its "highest annual product revenue growth rate in over 10 years."
Fortinet expects its adjusted operating margin to dip slightly to 25% to 26% in 2023 as it ramps up its investments in its cloud services, data centers, and facilities, but it still expects its adjusted earnings per share to rise 17% to 18%.
Fortinet is also swimming in cash. Its free cash flow rose 21% to $1.45 billion in 2022, and it spent more than 100% of that total ($1.99 billion) on buybacks. It repurchased its shares at an average price of $55.37 -- a discount of about 9% to its stock price as of this writing -- and reduced its outstanding shares by 4% throughout the year.
So is it too late to buy Fortinet's stock?
Fortinet's stock isn't cheap at 51 times forward earnings, but I believe its rock-solid growth rates justify that higher valuation. It's also fairly valued relative to its industry peers. For example, Palo Alto Networks -- which provides similar services and is growing at a comparable rate -- trades at 49 times forward earnings.
I believe Fortinet's glowing track record and crystal-clear road map make it a great long-term play on the growing cybersecurity sector. If it generates $10 billion in billings by 2025 -- which certainly seems achievable at this rate -- its stock could easily double in less than three years. Therefore, it's certainly not too late to add this high-quality stock to your portfolio.
Leo Sun has positions in Palo Alto Networks. The Motley Fool has positions in and recommends Fortinet and Palo Alto Networks. The Motley Fool has a disclosure policy.
Thu, 09 Feb 2023 02:52:00 -0600Leo Sunentext/htmlhttps://www.fool.com/investing/2023/02/09/is-it-too-late-to-buy-fortinet-stock/Killexams : Fortinet expands services, training to prevent cyberthreats
Fortinet’s multifaceted approach accelerates its commitment to eliminate the cybersecurity skills gap. CONTRIBUTED PHOTO
FORTINET — a global leader in broad, integrated and automated cybersecurity solutions — announced new security operations center (SOC) augmentation services, designed to help strengthen an organization's cyberresiliency and support short-staffed teams, strained by the talent shortage. In addition, as part of Fortinet's leadership efforts to help close the cyberskills gap, the Fortinet Training Institute has added initiatives across its programs to further increase access to its industry-recognized training and certifications.
The prevailing talent shortage remained one of the top challenges facing SOC teams globally. Fortinet's 2022 Cybersecurity Skills Gap report found that 50 percent of global leaders cited security operations as one of the most challenging roles to fill, and 42 percent were still in need of security operations analysts. Additionally, the same Fortinet survey found that worldwide, 80 percent of organizations suffered one or more breaches due to a lack of cybersecurity skills and awareness.
A lack of resources and personnel, combined with the sheer volume of security alerts SOC teams receive per day, often resulted in missed detections and slower responses that increased exposure to cyberrisk. SOC teams required an immediate solution to mitigate these challenges through investment in automated and integrated SOC, and cybersecurity technologies and experienced professionals to better protect against threats.
New and enhanced SOC augmentation services provided immediate support for short-staffed security operations teams.
Committed to helping organizations overcome these obstacles, Fortinet's new and enhanced services helped SOC teams to reduce their organizations' cyberrisk while freeing up their time to focus on higher-priority projects.
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Tue, 14 Feb 2023 10:00:00 -0600entext/htmlhttps://www.manilatimes.net/2023/02/15/public-square/fortinet-expands-services-training-to-prevent-cyberthreats/1878783Killexams : Fortinet shares surge more than 15% after earnings, outlook beats
Fortinet Inc. shares rallied in the extended session Tuesday after the cybersecurity company’s earnings topped Wall Street estimates, and its outlook forecast a slightly better-than-expected year.
Fortinet FTNT, -1.22% shares surged as much as 18% after hours, following a 3.4% rise in the regular session to close at $53.78.
The company reported fourth-quarter net income of $313.8 million, or 40 cents a share, compared with $199 million, or 24 cents a share, in the year-ago period.
Adjusted earnings, which exclude stock-based compensation expenses and other items, were 44 cents a share, compared with 25 cents a share in the year-ago period.
Revenue rose to $1.28 billion from $963.6 million in the year-ago quarter, while billings rose 32% to $1.72 billion.
Analysts surveyed by FactSet had forecast 39 cents a share on revenue of $1.3 billion and billings of $1.7 billion.
“Our market-share gains are being driven by Fortinet’s integrated and single-platform approach to cybersecurity,” said Ken Xie, Fortinet’s founder, chairman and chief executive, in a statement. “Given our cost-for-performance advantage, the convergence of security and networking, and the consolidation of products and vendors, we expect to continue our solid growth trajectory.”
Fortinet forecast earnings of 27 cents to 29 cents a share on revenue of $1.18 billion to $1.22 billion for the first quarter, on billings of $1.42 billion to $1.47 billion.
Analysts had estimated 28 cents a share on revenue of $1.18 billion and billings of $1.42 billion for the first quarter
For the year, Fortinet forecast earnings of $1.39 to $1.41 a share on revenue of $5.37 billion to $5.43 billion, and billings of $6.71 billion to $6.79 billion.
Analysts, on average, had estimated $1.40 a share on revenue of $5.34 billion, and billings of $6.7 billion for the year.
Tue, 07 Feb 2023 17:54:00 -0600en-UStext/htmlhttps://www.marketwatch.com/story/fortinet-shares-surge-more-than-15-after-earnings-outlook-beats-11675807269Killexams : Fortinet unveils ASIC to accelerate convergence of networking, security across every network edge
Ken Xie, Founder, Chairman of the Board and Chief Executive Officer at Fortinet.
Fifth-generation security processing unit (FortiSP5) delivers power-efficient performance to open new frontiers for securing the branch, campus, 5G, edge compute, operational technologies and more.
Ken Xie, Founder, Chairman of the Board and Chief Executive Officer at Fortinet, says: “With the introduction of FortiSP5, Fortinet once again sets new industry records for performance, cost and energy efficiency. As the only cyber security vendor leveraging purpose-built ASICs, an over 20-year investment in innovation, Fortinet delivers the secure computing power that will support the next generation of secure infrastructure.”
Fortinet (NASDAQ: FTNT), the global cyber security leader driving the convergence of networking and security, today announced FortiSP5, the latest breakthrough inASIC technologyfrom Fortinet, propelling major leaps forward in securing distributed network edges. Building on over 20 years of ASIC investment and innovation from Fortinet, FortiSP5 delivers significant secure computing power advantages over traditional CPU and network ASICs, lower cost and power consumption, and the ability to enable new secure infrastructure across branch, campus, 5G, edge compute, operational technologies and more.
Unparalleled innovation in custom chip performance
With an application-specific design and embedded multi-core processors to accelerate the convergence of networking and security functions, FortiSP5 delivers:
17x faster firewall performance compared to leading standard CPUs;
3.5x faster next-generation firewall (NGFW) performance compared to leading standard CPUs to handle higher levels of traffic inspection to detect and block threats;
32x faster encryption to protect sensitive data and secure virtual private networks;
2.5Gbps of SSL deep inspection to deliver the processing power needed to inspect encrypted traffic for malware without performance issues;
Secure boot to allow only approved operating system software to boot up, protecting critical infrastructure against malicious tampering;
Volumetric DDOS protection to thwart distributed denial-of-service (DDOS) attacks;
VXLAN/GRE hardware-accelerated encapsulation to enable secure interconnectivity for distributed networks; and
Hardware-accelerated quality of service (QOS) to enhance user experience with dedicated QOS for sensitive applications such as video conferencing.
Significant cost and energy savings
As a fifth-generation 7-nanometer chip, FortiSP5 packs more capabilities in a smaller form factor to deliver:
Eighty-eight percent less power consumption compared to the leading industry-standard CPU;
Industry-leading performance per watt; and
Industry-leading price-performance.
Supporting more applications to enable important customer use cases
With the ability to accelerate and concurrently run two times more applications – for example, NGFW, zero-trust network access (ZTNA), SD-WAN and SSL inspection –compared to the previous generation, FortiSP5 will support use cases such as:
Branch/campus: FortiSP5 ensures the transition to SD-Branch is efficient and cost-effective in a small form factor, enabling IT staff to simplify management and reduce opex while increasing network uptime. Additionally, as more organisations embrace the cloud and hybrid work model, FortiSP5 will continue to be a driver for Secure SD-WAN to empower customers to securely and seamlessly access applications anywhere while delivering consistent user experience with an optimised platform.
Edge compute: As edge computing improves efficiency and cost control through processing close to the edge, FortiSP5 supports high-speed networks and security threat protection for both commercial and operational technology (OT) environments, minimising bottlenecks for traffic movement.
Operational technology: The convergence of IT and OT has opened the infrastructure to increased security risks that can disrupt operations. FortiSP5 enables scalable convergence, securing both OT and IT infrastructures with a single, high-performance platform.
5G: 5G adoption is on the rise in enterprise networks, fuelling innovation at the edge as it provides higher bandwidth and lower latency. FortiSP5 enables a seamless transition to support 5G with an optimised and sustainable platform.
Proven system on a chip technology
FortiSP5 will power the next generation of entry and mid-range FortiGate firewalls being released later this year. Now on its fifth generation, we believe Fortinet’s proprietary system on a chip technology has a proven track record of powering the industry’s top-performing products and solutions. A few examples include:
A recent Forrester study highlighted that customers deploying Fortinet’s Secure SD-WAN solution, which is backed by FortiGate and SOC technology, achieved a 300% return on investment over three years with a payback period of only eight months.
Fortinet supports sustainability goals
The energy efficiency and performance per watt of FortiSP5 and the products that leverage the chip will help organisations reduce their power and space requirements. Fortinet remains committed to sustainable product innovation to ensure each generation of its products consumes less energy and is built sustainably.
Today, Fortinet’s Sunnyvale headquarters is a net-zero emissions facility and plans for global operations to be completely carbon neutral by 2030. Fortinet was recently named to the 2022 Dow Jones Sustainability World and North America Indices as one of the top sustainable companies in the world, highlighting Fortinet’s commitment to achieving a sustainable society.
“Enterprise applications and the users and devices that access them are more distributed than ever, which is causing organisations to rethink their edge network and security architectures. A key to enabling enterprise edge networking is having strong security without compromising on network performance and user experience. Fortinet has a 20-year history in ASIC technology that helps achieve these goals, and the company’s newest FortiSP5 continues that legacy. Fortinet’s portfolio of converged network and security solutions with custom chips helps enterprises accelerate their edge network and security transformation,” says Brandon Butler, Research Manager, Enterprise Networks at IDC.
Wed, 15 Feb 2023 21:47:00 -0600entext/htmlhttps://www.itweb.co.za/content/wbrpO7g2LRJvDLZnKillexams : Fortinet Stock Is Rising Today: What's Going On?
Fortinet IncFTNT shares are rising Wednesday morning after the company reported mixed fourth-quarter results and issued strong guidance. Several analysts also raised price targets on the stock following the company's quarterly results.
Q4 Revenue: $1.28 billion missed estimates of $1.29 billion
Q4 EPS: $0.44 beat estimates of $0.39
Fortinet said product revenue was up 43% year-over-year, while service revenue grew 27%. Billings jumped 32% compared to the prior year's quarter.
"Our market share gains are being driven by Fortinet's integrated and single platform approach to cybersecurity combined with FortiASIC technology, which lowers the management costs and the total cost of ownership for organizations," said Ken Xie, founder, chairman and CEO of Fortinet.
Outlook:Fortinet expects first-quarter revenue to be between $1.18 billion and $1.22 billion versus estimates of $1.18 billion. First-quarter adjusted earnings are expected to be in a range of 27 cents to 29 cents per share versus estimates of 27 cents per share.
Fortinet sees full-year 2023 revenue between $5.37 billion and $5.43 billion versus estimates of $5.36 billion. The company sees full-year adjusted earnings in a range of $1.39 to $1.41 per share versus estimates of $1.39 per share.
Analyst Assessment:
Piper Sandler analyst Rob Owens maintained Fortinet with a Neutral and raised the price target from $57 to $64.
Raymond James analyst Adam Tindle maintained Fortinet with an Outperform and raised the price target from $60 to $70.
JPMorgan analyst Brian Essex maintained Fortinet with an Overweight and raised the price target from $69 to $70.
Wells Fargo analyst Andrew Nowinski maintained Fortinet with an Overweight and raised the price target from $62 to $72.
Wedbush analyst Daniel Ives maintained Fortinet with an Outperform and raised the price target from $64 to $70.
One firm also downgraded the stock after shares charged higher on earnings: Keybanc analyst Michael Turits downgraded Fortinet from Overweight to Sector Weight.
FTNT Price Action: Fortinet has a 52-week high of $71.52 and a 52-week low of $42.61.
Fortinet shares are up 12.1% at $60.26 Wednesday morning, according to Benzinga Pro.
Wed, 08 Feb 2023 18:30:00 -0600entext/htmlhttps://www.benzinga.com/news/earnings/23/02/30809401/fortinet-stock-is-rising-today-whats-going-onKillexams : fortinet inc.
Major global brands, including McDonald's Corp, PepsiCo Inc. and the Estee Lauder Cos Inc. should consider pausing their operations in Russia, New York state's pension fund chief wrote in letters to several companies on Friday.
Top senators on the Senate Intelligence Committee introduced bipartisan legislation Thursday that seeks to sanction any nation involved in ransomware attacks against the U.S.
Thu, 16 Feb 2023 20:54:00 -0600en-UStext/htmlhttps://www.foxbusiness.com/quote?stockTicker=ftntKillexams : Fortinet, Tenable lead cybersecurity higher as Wedbush praises duo after Q4 results
hapabapa/iStock Editorial via Getty Images
Fortinet (NASDAQ:FTNT) and Tenable (NASDAQ:TENB) led cyber security stocks higher on Wednesday as investment Wedbush Securities praised the duo after they reported strong fourth-quarter results and guidance for 2023.
Analyst Dan Ives, who has an outperform rating on both Fortinet (FTNT) and Tenable (TENB), noted the two showed continued strength in the federal spending area as well as commercial enterprise.
Regarding Fortinet (FTNT), Ives said the results were "generally solid," even if there was a slight miss in revenue compared to expectations, but that other metrics were well above Wall Street expectations.
"Although, Fortinet is held to a higher standard by the Street given the company's history of large beats stacking against its competitors, we believe this performance and outlook were bullish not just for Fortinet but as a barometer on overall cyber security spending with many bears waiting for a huge stumble out of the gates," Ives wrote in a note to clients.
Ives added billings growth, strong free cash flow performance and a "formidable" business model make Fortinet (FTNT) "attractive" at these levels.
He boosted his per-share price target to $70 from $64 following the results.
Fortinet (FTNT) rose nearly 14% to $61.21 in early trading on Wednesday.
On Tenable (TENB), Ives said the most important takeaway from the results was the "solid" guidance for 2023, increasing confidence going into the new fiscal year.
"It's clear that Tenable is gaining a bigger foothold in enterprise and federal deal flow which adds to the confidence for the 2023 growth story," Ives wrote.
Tenable (TENB) expects first-quarter revenue to be between $186M and $188M, compared t expectations of $190.9M, while full-year revenue is expected to be between $800M and $810M, compared to expectations of $815.8M.
Tenable (TENB) tacked on 3.6% to $44.99 in early trading.
Other cyber security stocks moved higher on back of the results, Zscaler (ZS), CyberArk Software (CYBR), Check Point Software Technologies (CHKP) and Palo Alto Networks (PANW).
Wed, 08 Feb 2023 04:07:00 -0600entext/htmlhttps://seekingalpha.com/news/3933465-fortinet-tenable-lead-cybersecurity-higher-wedbush-praises-duoKillexams : Fortinet Q4 Earnings: Despite The Challenging Macro, This Sizzles
KanawatTH
Investment Thesis
Fortinet (NASDAQ:FTNT) has a less-than-straightforward story. Its business makes the bulk of its revenues from its Product segment. Something that the Street has generally been skeptical of.
But what Fortinet has excelled in, is in delivering high ROI to its customers, through its low cost-for-performance hardware. Consequently, this has allowed Fortinet to print free cash flow.
Indeed, this quarter we saw Fortinet's free cash flow jump 48% y/y. Reminding investors that there's much to like here, so let's get to it.
Fortinet's Near-Term Prospects
Fortinet continues to push forward with its Service segment. Even though the Service segment ever-so-slightly decelerated sequentially from 28% y/y CAGR to 27% y/y CAGR, these figures are quite compelling.
Particularly given that Microsoft's Azure (MSFT) and Amazon's AWS (AMZN) have both had their earnings results and the figures show that cloud enterprise spending is coming down.
However, the big theme for 2023, I suspect, will be around AI. Being a cybersecurity vendor for AI platforms could be a meaningful tailwind for cybersecurity companies.
That being said, the one aspect that has held back Fortinet in the eyes of investors has been the fact that the majority of its revenues come from its Product business. But this may be less bad than it sounds. Here's why.
Given the industry trend towards ''renting'' software services, investors have generally been skeptical of Fortinet's long-term prospects. Given that point of view, Fortinet used their earnings call to highlight that:
[...] a recent Forrester report highlighted that customers deploying Fortinet Secure SD-WAN solutions achieved a 300% return on investment over three years with a payback period of only eight months.
In sum, the story isn't over for Fortinet. Now, let's dig into its financials.
Revenue Growth Rates Are Fair
FTNT revenue growth rates
Fortinet's guidance for the year ahead isn't all that impressive. But what it does show is that there's ''at least'' 22% top line, if we assume that management is lowballing estimates, to leave room to positively impress investors over the coming quarters.
What's more, given that its billings for Q1 2023 are at 26% y/y and higher than the revenue growth rate guidance for Q1 reinforces the overall image that Fortinet's pipeline of future revenues to be ''recognized'' is healthy.
What's more, Fortinet once again reiterated that it believes it can continue to grow its operations to $8 billion in revenues by 2025. This would imply that investors getting involved today would be getting the ''reassurance'' that Fortinet can put out a 22% CAGR over the next two years.
What's more, given that Fortinet has been unwavering in its outlook for some time now, combined with its near-term guidance being compelling, certainly gives credence to its multi-year outlook.
Next, we'll turn our focus to what's arguably the best reason to own Fortinet.
Fortinet's Bull Case Laid Out
Remember 2020? A period when it was ''uncool'' to be profitable? Throughout that period, Fortinet had one of the weakest performances amongst its cybersecurity peers.
Nevertheless, Fortinet continued to plow forward and lay down the work then, to literally ooze free cash flow now.
Accordingly, Fortinet's guidance for 2025 points to somewhere in the ballpark of $3 billion of free cash flow. For a cybersecurity business that's priced at approximately 15x 2-years forward free cash flows, this is really an attractive valuation.
Given the value of its shares, Fortinet has steadily and consistently repurchased its own shares. But here comes the most shocking aspect! Check out the red arrow below.
FTNT Q4 2022
This is a rare breed of tech companies where repurchasing shares after stock-based compensation actually brings down the total number of shares outstanding.
That being said, it should be noted that looking ahead to 2023, the total number of shares is estimated to trickle higher by approximately 1%, reversing some of the progress of 2022.
The Bottom Line
The message coming out of Fortinet this quarter is about setting the record straight.
What customers actually want in this environment is savings. The time when enterprises were willing to spend beyond the budget to be safe online may be taking a breather after 2020-2021 saw a very strong pull forward in demand.
In sum, paying around 15x Fortinet's 2025 free cash flows is a compelling investment.