Feedback from large enterprises with more than $1 billion in revenue and up to 8,500 sites highlights the value of Fortinet Secure SD-WAN to reduce network disruption, mitigate risks, and Boost time to issue resolution
SUNNYVALE, Calif., Dec. 07, 2022 (GLOBE NEWSWIRE) --
John Maddison, EVP of Products and CMO at Fortinet
“Large enterprises around the world continue to turn to Fortinet to achieve their digital acceleration goals with solutions that converge networking and security. We’re pleased that Forrester has quantified both the network and security benefits of Fortinet Secure SD-WAN, which will advance our commitment to helping customers make informed decisions with validated solutions.”
Fortinet® (NASDAQ: FTNT), a global leader in broad, integrated, and automated cybersecurity solutions, today announced a business benefit analysis of Fortinet Secure SD-WAN and its ability to support large enterprises by delivering 300% ROI over three years and payback in eight months.
As one of the top SD-WAN vendors, Fortinet commissioned a Total Economic Impact™ (TEI) study by Forrester Consulting to analyze the value that Fortinet Secure SD-WAN can provide to large enterprises, examining both the network and security impact on customers’ businesses.
As part of the independent study, Forrester interviewed business decision-makers with experience across industries and geographies, including retail, healthcare, financial services, and manufacturing. Collectively, the organizations deployed Fortinet Secure SD-WAN and other Fortinet products, such as switches, wireless LAN, and wireless WAN, and have more than $1 billion in annual revenue, up to 8,500 sites, and up to 133,000 employees.
Based on customer feedback, Forrester developed a composite model for the study and built out a three-year financial model to reflect the costs and benefits of the investment.
Key findings from the study and benefits for customers include:
Eight Months Payback and 300% ROI: Customers deploying Fortinet Secure SD-WAN achieved a 300% return on investment over three years with payback in eight months. These benefits include a reduction in communications costs, increased productivity of security and network teams, improved network and security performance, and increased productivity of deployment teams.
65% Reduction in Network Disruption: With enhanced network performance enabled by Fortinet Secure SD-WAN, business users experienced a 65% reduction in the number of network disruptions.
50% Improvement in Resolving Issues: Fortinet offers increased visibility and effective, broad protection, allowing security and network teams to identify and remediate network issues more quickly. Improving time to issue resolution by as much as 50% enabled the composite organization to reassign security and network team resources to higher value activities, resulting in a three-year, risk-adjusted productivity benefit of $1.4 million.
Increased Productivity of Deployment Team: Fortinet Secure SD-WAN enabled the composite organization to save time by 75% per new deployment, resulting in significant efficiencies for the deployment team.
Fortinet Secure SD-WAN Transforms and Secures WAN
Prior to implementing Fortinet Secure SD-WAN, the organizations used a combination of technologies and vendors to manage, maintain, and monitor their networks. These solutions, which relied on MPLS, internet, and assorted hardware, lacked visibility and adequate security coverage, forcing network engineers and administrators to spend excessive time identifying and resolving unanticipated problems on an ad hoc basis. Additionally, scaling and modifying existing solutions became increasingly cost-prohibitive and time-consuming.
To learn more about the additional benefits of Fortinet Secure SD-WAN based on real customer feedback, obtain The Total Economic™ Impact of Fortinet Secure SD-WAN study.
Additional Analyst Recognition and Customer Validation of Fortinet Secure SD-WAN
In addition to these findings from the independent Forrester study, Fortinet Secure SD-WAN has received industry recognition and momentum throughout the year. Fortinet was named a Leader in the 2022 Gartner® Magic Quadrant™ for SD-WAN for the third consecutive year, placing highest in the quadrant for its ability to execute.
Furthermore, Fortinet is the only vendor to have been ranked #1 in three of the five use cases in the 2022 Gartner® Critical Capabilities for SD-WAN report for the past two years for Remote Worker, Security-Sensitive WAN, and WAN for Small Branches.
Fortinet Secure SD-WAN also received positive validation from its customers. Fortinet was named a Customers’ Choice in the March 2022 Gartner Peer Insights ‘Voice of the Customer’: WAN Edge Infrastructure report—for the third year in a row—in recognition of the reviews that customers voluntarily submit about their experience with Fortinet’s Secure SD-WAN solution.
Gartner does not endorse any vendor, product or service depicted in its 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’s Research & Advisory organization 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.
Gartner and Magic Quadrant are registered trademarks and service mark, and PEER INSIGHTS is a trademark and service mark, of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.
Gartner, Magic Quadrant for SD-WAN, Jonathan Forest, Naresh Singh, Andrew Lerner, Karen Brown, 12th September 2022
Gartner Peer Insights content consists of the opinions of individual end users based on their own experiences with the vendors listed on the platform, should not be construed as statements of fact, nor do they represent the views of Gartner or its affiliates. Gartner does not endorse any vendor, product or service depicted in this content nor makes any warranties, expressed or implied, with respect to this content, about its accuracy or completeness, including any warranties of merchantability or fitness for a particular purpose.
Fortinet (NASDAQ: FTNT) makes possible a digital world that we can always trust through its mission to protect people, devices, and data everywhere. This is why the world’s largest enterprises, service providers, and government organizations choose Fortinet to securely accelerate their digital journey. The Fortinet Security Fabric platform delivers broad, integrated, and automated protections across the entire digital attack surface, securing critical devices, data, applications, and connections from the data center to the cloud to the home office. Ranking #1 in the most security appliances shipped worldwide, more than 615,000 customers trust Fortinet to protect their businesses. And the Fortinet NSE Training Institute, an initiative of Fortinet’s Training Advancement Agenda (TAA), provides one of the largest and broadest training programs in the industry to make cyber training and new career opportunities available to everyone. Learn more at https://www.fortinet.com, the Fortinet Blog, or FortiGuard Labs.
Copyright © 2022 Fortinet, Inc. All rights reserved. The symbols ® and ™ denote respectively federally registered trademarks and common law trademarks of Fortinet, Inc., its subsidiaries and affiliates. Fortinet’s trademarks include, but are not limited to, the following: Fortinet, the Fortinet logo, FortiGate, FortiOS, FortiGuard, FortiCare, FortiAnalyzer, FortiManager, FortiASIC, FortiClient, FortiCloud, FortiCore, FortiMail, FortiSandbox, FortiADC, FortiAI, FortiAP, FortiAppEngine, FortiAppMonitor, FortiAuthenticator, FortiBalancer, FortiBIOS, FortiBridge, FortiCache, FortiCall, FortiCam, FortiCamera, FortiCarrier, FortiCASB, FortiCenter, FortiCentral, FortiConnect, FortiController, FortiConverter, FortiCNP, FortiDB, FortiDDoS, FortiDeceptor, FortiDirector, FortiDNS, FortiEDR, FortiExplorer, FortiExtender, FortiFirewall, FortiFone, FortiGSLB, FortiHypervisor, FortiInsight, FortiIsolator, FortiLocator, FortiLog, FortiMeter, FortiMoM, FortiMonitor, FortiNAC, FortiPartner, FortiPenTest, FortiPhish, FortiPortal, FortiPresence , FortiProtect, FortiProxy, FortiRecorder, FortiReporter, FortiSASE, FortiScan, FortiSDNConnector, FortiSIEM, FortiSDWAN, FortiSMS, FortiSOAR, FortiSwitch, FortiTester, FortiToken, FortiTrust, FortiVoice, FortiVoIP, FortiWAN, FortiWeb, FortiWiFi, FortiWLC, FortiWLCOS and FortiWLM.
Other trademarks belong to their respective owners. Fortinet has not independently Verified statements or certifications herein attributed to third parties and Fortinet does not independently endorse such statements. Notwithstanding anything to the contrary herein, nothing herein constitutes a warranty, guarantee, contract, binding specification or other binding commitment by Fortinet or any indication of intent related to a binding commitment, and performance and other specification information herein may be unique to certain environments. This news release may contain forward-looking statements that involve uncertainties and assumptions, such as statements regarding technology releases among others. Changes of circumstances, product release delays, or other risks as stated in our filings with the Securities and Exchange Commission, located at www.sec.gov, may cause results to differ materially from those expressed or implied in this press release. If the uncertainties materialize or the assumptions prove incorrect, results may differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Fortinet assumes no obligation to update any forward-looking statements, and expressly disclaims any obligation to update these forward-looking statements.
Fortinet, a global leader in broad, integrated and automated cybersecurity solutions, has announced a business benefit analysis of Fortinet Secure SD-WAN and its ability to support large enterprises by delivering a 300% return in investment over three years and payback in eight months.
“Large enterprises around the world continue to turn to Fortinet to achieve their digital acceleration goals with solutions that converge networking and security. We’re pleased that Forrester has quantified both the network and security benefits of Fortinet Secure SD-WAN, which will advance our commitment to helping customers make informed decisions with validated solutions.” — John Maddison, executive vice president of products and chief marketing officer at Fortinet
As one of the top SD-WAN vendors, Fortinet commissioned a Total Economic Impact (TEI) study by Forrester Consulting to analyse the value that Fortinet Secure SD-WAN can provide to large enterprises, examining both the network and security impact on customers’ businesses.
As part of the independent study, Forrester interviewed business decision makers with experience across industries and geographies, including retail, healthcare, financial services and manufacturing. Collectively, the organisations deployed Fortinet Secure SD-WAN and other Fortinet products, such as switches, wireless LAN and wireless WAN, and have more than US$1-billion in annual revenue, up to 8 500 sites, and up to 133 000 employees.
Based on customer feedback, Forrester developed a composite model for the study and built out a three-year financial model to reflect the costs and benefits of the investment.
Key findings from the study and benefits for customers include:
Prior to implementing Fortinet Secure SD-WAN, the organisations used a combination of technologies and vendors to manage, maintain and monitor their networks. These solutions, which relied on MPLS, Internet and assorted hardware, lacked visibility and adequate security coverage, forcing network engineers and administrators to spend excessive time identifying and resolving unanticipated problems on an ad hoc basis. Additionally, scaling and modifying existing solutions became increasingly cost-prohibitive and time-consuming.
To learn more about the additional benefits of Fortinet Secure SD-WAN based on real customer feedback, obtain The Total Economic Impact of Fortinet Secure SD-WAN study.
In addition to these findings from the independent Forrester study, Fortinet Secure SD-WAN has received industry recognition and momentum throughout the year. Fortinet was named a Leader in the 2022 Gartner Magic Quadrant for SD-WAN for the third consecutive year, placing highest in the quadrant for its ability to execute.
Furthermore, Fortinet is the only vendor to have been ranked first in three of the five use cases in the 2022 Gartner Critical Capabilities for SD-WAN report for the past two years for Remote Worker, Security-Sensitive WAN and WAN for Small Branches.
Fortinet Secure SD-WAN also received positive validation from its customers. Fortinet was named a Customers’ Choice in the March 2022 Gartner Peer Insights “Voice of the Customer”: WAN Edge Infrastructure report — for the third year in a row — in recognition of the reviews that customers voluntarily submit about their experience with Fortinet’s Secure SD-WAN solution.
According to one study, cybersecurity attacks globally have risen by 32% year over year and there are over 1,200 attacks per week. This is no surprise given the increase in the use of technology and the rise of remote working which has widened the attack surface. Therefore it is not surprising that the cybersecurity industry was valued at $139 billion in 2021 and is forecasted to grow at a rapid 13.4% compounded annual growth rate, reaching a value of $376 billion by 2029. Fortinet is in a prime position to benefit from this growth trend as a leader in firewalls. The company has recently posted strong financial results for the third quarter of 2022, beating both top and bottom-line estimates. In this post, I'm going to break down the company's business model, financials, and valuation, let's dive in.
Fortinet (NASDAQ:FTNT) has created a "Security Fabric" which aims to converge multiple cybersecurity solutions into a single platform. This includes Fortinet Threat Intelligence, Cloud Security, Zero Trust Access, Network Security and more. The company competes with companies such as Check Point (CHKP) and Palo Alto Networks (PANW) in its Cloud Security Segment. While the business also competes with Zscaler (ZS) for its Zero Trust access offering. "Zero Trust" is a network access methodology that aims to provide users the "least privileged access" to only the applications they need. This stops hackers from entering a company's network via a harmless application before moving laterally to the financial applications.
Fortinet is a Gartner leader in its Next Generation Firewall solution and won the customer choice award in 2022. In addition, the company is the market leader in firewalls with its products making up 37% of all units shipping in 2021.
Fortinet reported solid financial results for the third quarter of 2022. Starting with Billings, which is the amount invoiced to customers and the true "top line" for SaaS companies. Billings increased by 32.6% year over year to $1.41 billion. Following on from this revenue was $1.15 billion, which increased by a rapid 32% year over year and beat analyst estimates by $25.59 million.
Total revenue was driven by solid product revenue growth of $468.7 million which increased by 39% year over year across its Core and Enhanced Platform technology products. This is impressive growth given a tough year-over-year comparison and supply chain challenges. Service revenue also increased by a solid 28.4% year over year and 3% sequentially to $680 million.
There are three drivers which are helping to accelerate revenue growth across its product range. These include the increase in cybersecurity threats (as mentioned in the introduction), the merging of security and networking, and vendor consolidation. For a long time, the cybersecurity industry has been categorized by a variety of single-point solutions and specialist companies. This was great in the short term as each company had its own expertly honed product. However, for IT and security teams the security tech stack has become unmanageable with high operational overhead. For example, internal security will have to manage patches, updates, licenses, etc. on many different solutions.
Fortinet solves this problem with its "platform strategy" which enables customers to "converge" together both networking and security products, resulting in lower management time and lower operating costs.
A Forrester report even highlighted this and labeled Fortinet as a leader in enterprise firewalls for the first time. The report stated, "Fortinet has built a flexible and capable platform" and it "excels at performance for value".
The company has continued to eat market share in the area of Secure SD-WAN (Wide-Area-Network) which increased bookings by 45% year over year. Management believes the company is on track to become the market share leader in this space over the next couple of years.
Fortinet has also been "growing upmarket" as it executes its strategy of targeting higher-order value enterprise customers. In the third quarter of 2022, the number of deals over $1 million increased by over 80% to 153 deals.
Fortinet is well diversified with the Americas making up 40.7% of revenue followed by EMEA at 38.6% and APAC at 20.75%. EMEA was surprisingly the fastest growing segment as revenue increased by 37% year over year. This was followed by the Americas with 34% revenue growth and the APAC region with 23% growth.
On to profitability and margins, the company reported $875.5 million, in gross profit which increased by 32% year over year at a solid 76.2% gross margin. Operating Income was $334.9 million, which increased by blistering 45% year over year. This was driven by a solid improvement in operating margin from 25.8% to 28.3%, as the company benefited from higher operating leverage and FX tailwinds.
Earnings per share were $0.29, which beat analyst expectations by $0.06.
Fortinet has also reported solid growth in its cash flow which increased by 19.9% year over year to $463.8 million, including real estate add-backs.
The company has a solid balance sheet with cash, short-term investments, and marketable securities of $1.81 billion. In addition, the company has ~$989 million in long-term debt.
In order to value Fortinet I have plugged the latest financials into my advanced valuation model which uses the discounted cash flow method of valuation. I have forecasted a conservative 30% revenue growth for next year, which is lower than the 34% guidance for the full year of 2022. In addition, I have forecasted 32% revenue growth per year over the next 2 to 5 years in order to be conservative.
In order to increase the accuracy of the valuation, I have capitalized R&D expenses, which has lifted the net income. In addition, I have forecasted the company to continue to increase its operating margin to 27% over the next 8 years, as it continues to benefit from strong operating leverage.
Given these factors I get a fair value of $52 per share, the stock is trading at $77.87 per share at the time of writing and is thus 33% undervalued.
As an extra data point, Fortinet trades at a Price to Sales ratio = 10 which fairly valued relative to historic multiples. It should be noted that Fortinet trades at a slightly higher PS multiple than industry Peers but the company does have strong profit margins which aren't factored in via the PS metric.
The high inflation and rising interest rate environment is squeezing the margins of many businesses and analysts are even forecasting a recession. Therefore I expect longer sales cycles and delayed spending although the cybersecurity industry does look to be relatively immune from many of the major headwinds.
Fortinet is a solid technology innovator and has a diversified business model. The company has highlighted the problems in the market with multiple vendors and aims to help the industry consolidate. It is growing strong across all product lines and the stock is undervalued intrinsically.
The MarketWatch News Department was not involved in the creation of this content.
Dec 08, 2022 (Reportmines via Comtex) -- BFSI security refers to the various measures taken to protect the financial interests of banks, their customers and employees. The main applications of BFSI security are:- Protection of customer data: Banks maintain customer data such as account numbers, transaction history and balances in a confidential manner to ensure that customers' banking transactions are safe and secure.- Fraud prevention: Banks use various fraud prevention measures, such as risk profiling and monitoring customer behavior, to identify potential risks and prevent fraudulent activities.- Security of bank systems: Banks continuously update their computer systems to ensure that they are protected from threats posed by viruses, hackers and other malicious actors.
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It has been about a month since the last earnings report for Fortinet (FTNT). Shares have added about 20.6% in that time frame, outperforming the S&P 500.
Will the accurate positive trend continue leading up to its next earnings release, or is Fortinet due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most accurate earnings report in order to get a better handle on the important catalysts.
Fortinet Inc. reported third-quarter 2022 non-GAAP earnings per share (EPS) of 33 cents, which topped the Zacks Consensus Estimate of 27 cents. The bottom line improved 65% from the year-ago quarter’s earnings of 20 cents per share.
Total revenues of $1.15 billion beat the Zacks Consensus estimate of $1.12 billion and improved 32.6% year over year. The top line was driven by strong demand for the company’s FortiGate technology, which includes a security processing unit, an integrated Security Fabric platform and hybrid multi-cloud offerings.
Strategic investments in developing powerful products and services and efforts in expanding into the adjacent addressable markets and boosting the firm’s global sales force aided Fortinet’s quarterly performance.
Segment-wise, Product revenues jumped 39% year over year to $468.7 million. This upside can be attributed to the continued adoption of the FortiGate-based secure SD-WAN solution, as well as strong revenues of non FortiGate products and increased demand for integrated security fabric products.
Services revenues climbed 28.4% to $680.8 million.
Billings were up 32.6% to $1.41 billion on solid execution and growth across all regions.
As of Sep 30, 2022, deferred revenues were $4.19 billion, up 35% year over year.
Geographically, the EMEA region registered the highest top-line growth with a 37.3% increase, followed by the Americas’ 33.6% and APAC’s 22.7%.
During the September-end quarter, the company secured 153 total deals worth $1 million or more each. Secure SD-WAN continued to be the leading contributor to growth in terms of the number of deals worth more than $1 million in the quarter.
The non-GAAP gross margin contracted 30 basis points (bps) year over year to 76.2% in the third quarter of 2022. This reflects an expansion of 30 bps in the Product gross margin while Services gross margin remained flat.
Non-GAAP operating income jumped 45.3% to $324.9 million in the reported quarter, while non-GAAP operating margin increased 250 bps to 28.3%.
Fortinet exited the third quarter with cash and cash equivalents and short-term investments of $1.70 billion, down from $1.73 billion reported at the end of second-quarter 2022.
During the reported quarter, FTNT generated operating and free cash flow of $483 million and $395.2 million, respectively. During the first nine months of 2022, the company generated an operating cash flow of $1.20 billion.
In the third quarter, the company bought back $500 million worth of shares and in the first nine months of 2022, it bought back $1.99 billion worth of shares.
Fortinet issued impressive guidance for the fourth quarter and raised the same for the full-year 2022. For the fourth quarter of 2022, the company estimates revenues in the range of $1.275-$1.315 billion. Billings are estimated to be $1.665-$1.720 billion.
Non-GAAP gross margin is expected in the range of 75-76%, while non-GAAP operating margin is anticipated between 30% and 31%. Non-GAAP EPS is projected at 38-40 cents.
For 2022, Fortinet predicts revenues in the band of $4.410-$4.450 billion, up from the prior estimate of $4.350-$4.400 billion. However, billings are now expected in the range of $5.540-$5.595 billion compared with the earlier range of $5.560-$5.640 billion.
Non-GAAP EPS is now anticipated between $1.13 and $1.15, up from the previous range of $1.01-$1.06.
Non-GAAP gross margin and operating margin are now expected in the bands of 75-76% and 26-27%, respectively.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 14.85% due to these changes.
At this time, Fortinet has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Fortinet has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Fortinet is part of the Zacks Security industry. Over the past month, Check Point Software (CHKP), a stock from the same industry, has gained 7.7%. The company reported its results for the quarter ended September 2022 more than a month ago.
Check Point reported revenues of $577.6 million in the last reported quarter, representing a year-over-year change of +8.2%. EPS of $1.77 for the same period compares with $1.65 a year ago.
Check Point is expected to post earnings of $2.35 per share for the current quarter, representing a year-over-year change of +4.4%. Over the last 30 days, the Zacks Consensus Estimate has changed 0%.
Check Point has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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The University of Tasmania has partnered with security firm Fortinet by joining the Fortinet Academic Partner Program, aimed at building a diverse, skilled workforce to help close the cybersecurity skills gap.
The program will begin in Semester 1, 2023 and the University of Tasmania is the 498th education institution globally that has implemented the Fortinet Academic Partner Program, and the 16th in Australia.
As part of the Fortinet Training Institute, the Academic Partner Program works with academic institutions worldwide to create a more diverse, equitable, and inclusive cybersecurity workforce by increasing access to training courses to address the global talent shortage.
Fortinet says the program bridges the gap between learning and careers through access to industry-recognised Fortinet Network Security Expert (NSE) training and certification courses.
The Fortinet Academic Partner Program collaborates with higher education institutions and schools around the world to prepare students to become skilled cybersecurity professionals.
At the University of Tasmania, the program will be provided to students in several forms: as part of the ICT curriculum for high achievers/Honours students; as a short course for undergraduate/diploma students or school leavers; and, significantly, to people outside the sector that are looking to reskill, return to work, or switch careers.
According to the Fortinet 2022 Cybersecurity Skills Gap global research report, 80 per cent of organisations worldwide suffered one or more breaches that they could attribute to a lack of cybersecurity skills and/or awareness - (i) Closer to home, the Fortinet Networking and Cybersecurity Adoption Index found that only 41 per cent of organisations considered themselves highly resourced to protect data assets and IT infrastructure. (ii) Further, the (ISC)² Cybersecurity Workforce Study suggests the global cybersecurity workforce needs to grow 65 per cent to effectively defend organisations’ critical assets. (iii)
The Head of the School of ICT at the University of Tasmania, Professor Anna Shillabeer, said, “As part of my work here, we undertook a rethink of what is required to build capability and digital skills. We identified that there are pockets of Tasmania’s IT with significant capabilities; however, there is also a skills shortage that needs to be overcome, especially in cybersecurity, to better cope with demand.
“The Fortinet Academic Partner Program is continuously updating its training with content that is relevant and dynamic for the issues and challenges cyber professionals face today. It is so important that we offer current skills for our students to ensure they are workforce ready.
“This new offering will significantly benefit the Tasmanian industry in all sectors, as students will now enter the workforce with qualifications as well as cybersecurity certifications. Additionally, Tasmanians that have developed life skills in the workforce in alternative sectors will be able to use their certifications to assist with finding employment in IT and cybersecurity roles.”
Dale Nachman, Country Manager – Australia, Fortinet, said, “Fortinet recently surpassed the milestone of issuing one million NSE certifications globally. Partnerships with universities, such as the University of Tasmania, are key to Fortinet’s mission to close the cyber skills gap. The cyber threat landscape continues to grow in both volume and sophistication and having trained professionals to help governments and enterprises Boost their cyber resilience will be critical.
“Through the Fortinet Academic Partner Program, the University of Tasmania will be able to provide leading industry cybersecurity training and certification. Graduates of the program will have in-demand cybersecurity skills to help protect networks from global cyber threats, such as phishing attacks, ransomware, and business email compromise. Fortinet is committed to supporting Tasmania, and Australia more broadly, with the development of cybersecurity professionals. Working with the University of Tasmania is a critical part of this.”
Fortinet on Monday announced the release of its FortiGate Cloud-Native Firewall (CNF) on Amazon Web Services (AWS). The new cybersecurity solution, available as a software as a service (SaaS), is aimed at enterprises using AWS that are looking for enterprise-grade next-generation firewall (NGFW) functionality with cloud-native support.
“FortiGate CNF incorporates FortiGuard artificial intelligence (AI)-powered Security Services for real-time detection of and protection against malicious external and internal threats, and is underpinned by FortiOS for a consistent network security experience across AWS and on-prem environments,” said Fortinet.
NGFWs like FortiGate CNF build on traditional firewall capabilities like packet filtering, network address translation (NAT) and virtual private network (VPN) capabilities with deep packet inspection, intrusion prevention and other techniques to maintain more performant and secure connections.
“FortiGate CNF is a SaaS offering that delivers seamless scalability, implicit resiliency, streamlined workflows, and flexible consumption through deep cloud-native integrations with native AWS services such as AWS Gateway Load Balancer, AWS Firewall Manager, and AWS Marketplace. Fortinet and AWS bring together the best of both worlds – deep security expertise and leading edge cloud technology – in a simple-to-manage and easy-to-consume service,” said Fortinet’s Vincent Hwang and Vinod Sundarraj in a blog post announcing the new service.
FortiGate CNF enables businesses to aggregate security across cloud networks and their availability zones, as well as virtual private clouds (VPCs), according to Fortinet. It also natively supports Graviton, the custom server hardware AWS uses. Graviton, now in its third generation, is a 64-bit CPU designed by AWS based on Arm’s technology.
“As a managed service, FortiGate CNF reduces the network security operations workload. Enterprises don’t have to configure, provision, or maintain any firewall software infrastructure,” said Hwang and Sundarraj.
Fortinet touts the simple user interface for managing FortiGate as making it easy to define and deploy security policies that include dynamic metadata-based policies on AWS, using a “single pane of glass” interface through the FortiManager app. AWS Firewall Manager is supported to help streamline security management and automated rollout.
“This AWS support helps security teams move at the speed and scale of applications teams, while support of AWS Gateway Load Balancer eliminates do-it-yourself automation and helps secure Amazon Virtual Private Cloud (Amazon VPC) environments while improving high availability and scaling,” said Fortinet.
Underpinning FortiGate CNF are Artificial Intelligence (AI)-powered security services that leverage Machine Learning (ML) models. This technology helps the firewall software identify threats, including unknown or novel ones, based on real-time intelligence, behavior-based detection, and automated prevention, Fortinet said.
While FortiGate CNF is squarely aimed at businesses looking to deploy an NGFW as a software instance, Fortinet still targets hyperscalers and network operators with physical gear like the FortiGate 4800F, announced in August. That device occupies four rack units while providing up to 2.4 terabits per second (2 Tbps) throughput. It includes 400 gigabit per second Ethernet (GbE), 200 GbE and 50 GbE ports for scalability. Specific to 5G, Fortinet said the 4800F enables massive machine-to-machine (M2M) connection that requires secure IP connectivity to untrusted environments like the Internet, edge sites, and cloud services. It can support 25 million connections per second. The 4800F also secures 5G RAN traffic and core connectivity with IPsec-based VPN performance that Fortinet clocks at 19x faster than previous models.
For years, Fortinet has leaned on its custom security and networking ASICs to compete against rival vendors like Juniper, Palo Alto Networks, and Cisco in the firewall space.…
But when it comes to extending their security stack to the cloud, any advantage offered by its custom silicon starts to erode. Fortinet can’t exactly deploy its hardware in the cloud. Instead, it’s forced to — like most other vendors — run its firewall on general-purpose compute infrastructure, which has traditionally meant x86 CPUs from Intel or AMD.
Fortinet’s latest attempt to sell customers on its cloud firewalls involves repackaging its security stack as a software-as-a-service platform in AWS. Dubbed FortiGate CNF, the service features the standard assortment of security functionality you’d expect from a next-generation firewall, including URL, DNS and application filtering and intrusion prevention/detection to name a few.
However, unlike most virtualized or containerized firewalls, Fortinet’s kit is designed to take advantage of Amazon Web Services (AWS) own custom silicon in the form of its Graviton GPUs.
AWS began offering Arm-based VMs with the launch of Graviton in 2018. Rather than trying to out-perform x86 CPUs from Intel or AMD, the Graviton sought to achieve better value. Amazon claims its third-gen Graviton CPUs offer 40 percent better price-to-performance than “comparable fifth-generation x86-based instances.”
In a similar vein, Fortinet went out of its way to avoid the syllabu of performance in its announcement. It’s an uncharacteristic move for a company that rarely misses an opportunity to call out the performance gap between its appliances and that of its competitors. Instead, the vendor highlighted the consistent management experience and touting lower operating costs associated with running its software stack on Amazon’s Arm-based CPUs.
Lower operating costs have been a hallmark of Arm CPUs, as cloud providers attempt to attract customers to the architecture. When Oracle introduced its Ampere Altra-based instances it did so at $0.01 per core per hour.
Whether Fortinet somehow managed to achieve consistent performance across on-prem and cloud deployments by going the cloud native route or opting for Amazon’s Arm cores remains unclear. Pressed on any performance delta between its on-prem and cloud capabilities, Fortinet provided the following vague statement. “We’re running FortiGate-VMs that deliver very-high firewall throughput performance.”
Each customer is assigned its own VM that’s autoscaled to as demands change, Fortinet tells The Register. And a peek at AWS Graviton instances offers some clues as to what the upper limits of Fortinet’s new cloud firewalls may be. Amazon’s largest Graviton instance — the 64-core, 128GB c7g.16xlarge — maxes out at 30Gbps of network bandwidth.
That would put the maximum threat inspection on par with the FortiGate 3000F — a high-throughput firewall appliance aimed at hyperscale environments — but that’s assuming that the CPU can actually keep up. And even if it could, it wouldn’t be cheap. At $2.7/hour plus $0.031 per gigabyte inspected, 30Gbps worth of data flows would run a customer somewhere in the neighborhood of $420 an hour.
With that said, there’s still some merit to maintaining a consistent security stack across on-prem and cloud infrastructure.
While all the major cloud providers offer some kind of firewalling functionality in house, employing them usually requires maintaining two separate security policies. Microsoft’s security wing this summer attributed 80 percent of ransomware attacks back to configuration errors.
Extending an enterprises’ existing security stack to the cloud to minimize this potential has been a major selling point behind any number of virtualized or containerized firewalls, including those from Juniper, Palo Alto Networks, and in this case Fortinet. ®
Fortinet, Inc. (NASDAQ:FTNT) 6th Annual Wells Fargo TMT Summit Conference Transcript November 29, 2022 4:50 PM ET
Michael Xie - Co-Founder and CTO
Peter Salkowski - Head, Investor Relations
Andy Nowinski - Wells Fargo
Welcome, everyone. Thank you for joining us today. My name is Andy Nowinski. I am a software analyst at Wells Fargo. And today, it’s my pleasure to introduce you to the team at Fortinet. So we have Michael Xie, the Co-Founder and CTO of Fortinet; and Peter Salkowski, Head of Investor Relations. Thanks, guys. Thank you, Michael. Thanks, Pete. Thanks, Peter.
Well, thank you guys for joining us today. Obviously, a complete TMT audience here. So maybe you could start off by just giving us a brief overview of Fortinet for those that don’t know what Fortinet does.
Andy, I am going to do our Safe Harbor real quick.
I am going to do our Safe Harbor real quick…
… before I know that’s not going to have any bearing on what you are going to say, Michael, but I am going to do it anyway and really fast. I’d like to remind everyone that we may make forward-looking statements during today’s fireside chat. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected in those statements.
Please refer to our SEC filings, in particular, the risk factors in our most accurate Form 10-K and Form 10-Q and the other reports we may file from time to time with the SEC for additional information on factors that may cause actual results to differ materially from our current expectations.
All forward-looking statements reflect our opinions only as of the date of this presentation, and we undertake no obligation and specifically disclaim any obligation to update forward-looking statements. Mike?
All right. Thank you, Peter. So, Andy, thank you. It’s a privilege to be here. And I think just a quick version, Fortinet is a leading cybersecurity company. We started out 22 years ago in 2000 and we headquartered in -- at the Silicon Valley.
So today, obviously, we are public. Our symbol is FTNT. We have a global footprint, offer a broad portfolio for cybersecurity and our customers from SMB to large enterprise and carrier as well.
So myself, Michael Xie, I am a Co-Founder and I am the CTO for the company for the past 23 years. So it’s been a great journey and so I think maybe you just -- I want to outline a couple of things. When we started out, we had a couple of visions.
One is we think the cybersecurity company should define their problems based on what their customer needs and particularly in our industry, we help our customers to find the threats and as threats constantly evolve, so basically our business evolves based on that as well. So I think over the years, I think, we may talk about that. We see how the technology evolve from the very early firewall driven centric business to today’s platform driven broad portfolio.
And I think the second piece is also as another vision we started out is we always believe the cybersecurity should not become a cyber slowdown, because we see a lot of the solutions out there, they are not fast enough, it’s low latency, it’s low throughput.
So we have been very unique in that way we design our own ASIC chips. We do a lot of things in hardware in addition to other software designs. We build a place to be the fastest firewall in the world. That’s about it, Andy.
Q - Andy Nowinski
It’s a good overview. It certainly is a difficult balance when you are trying to keep an organization safe and protect them from threats and also not slow the organization down and provide them a -- not get in the way of productivity. So having that custom ASIC, I think, is something that you have developed that enables that better performance versus the competition?
Yes. We -- I think the company culture wise, we are -- I mean since the start, we are a very technology-centric company and innovation has always been one of our key focuses. So the first part is we basically we speak with our customers and partners. We define the problem and then how to solve that.
I think, so we have like a large team building our products and solutions. I think one indicator, it may not be the only one, is like just look at the number of patents. I think we have a slide in our investor package that we listed the patents for us and competitors.
We are probably having more than the next couple of guys combined. So I think it’s not the only indicator, but it’s basically showing the culture wise we really encourage our employees to focus on innovation and solving problems.
Another, I think, a really interesting point on Fortinet, you talked about having a 20-year tenure in the industry. So you have been around in this industry for a long time where firewalls are really the only -- the first line of defense and the only line of defense 20 years ago. Obviously, the company has largely evolved, but when you think about a tightening macro environment and how things -- our priorities may be shifting within security, why does Fortinet continue to deliver record level growth in firewalls over the last 18 months when more applications are moving to the cloud, more applications are moving outside the data center, yet you still manage to drive record levels of growth during that timeframe?
Yeah. So I think there are obviously several aspects of the business that’s important to drive that growth and I will try to first address the technology side. So being in the industry for more than 20 years, what we find 6is the -- in our industry it’s interesting, it’s like the arms race between the what we call the bad guys.
It could be originally in the -- when we started out, it could be the cyber hobbyist providing the viruses just to get their name out to international crime syndicates with the ransomware or skimming of the credit card number and to like some very advanced hacking teams that’s possibly backed by maybe even nation, state background.
So I think with that sort of diverse threats, like, the landscape and the -- it’s also the ever expanding threat surface that a lot of the enterprise customers today as they used to have on-prem network, but now they are expanding to the cloud.
Also, there’s kind of IoT devices. You may not know this. And also in the OT world, a lot of the manufacturing and oil, gas, they have a lot of these devices traditionally mechanical, but they are all controlled by computer. So it’s ever increasing threat landscape in the tech surface. So all these needs some kind of effective protection.
So I think for us, we -- from day one, when we started the company, we realized at that time, if you go back 23 years, the firewall company at that time focused mostly on safety inspection when the content payload starts to carry attacks, they say, okay, it’s not my problem, right? I have my firewall.
But at Fortinet, we started off by saying we are a cybersecurity company, and if the threat changes, we are going to evolve our technology to stop that. So we started out by -- we are the first one who came out with the UTM firewall, the next-gen firewall, and then, gradually, as the attack surface extends to the cloud, to the OT, we just basically expanded the portfolio to cover.
So for example, for the last five years to 10 years, a significant driver was SD-WAN, a lot of customers, they started to have branch offices, they build up the overlay between the branch and HQ. So we evolve the technology and SD-WAN is part of our standard offerings and Gartner also recognized that by putting us into the Leaders Quadrant for SD-WAN, as well as the network firewall.
So I mean, moving forward, we are also seeing lot of the advanced threats like APT, we call it advanced persistent threat, APT. So there’s different technology on that as well, which requires newer platform based defense mechanism, like, Zero Trust technologies, and like OT would bring a total different aspect of those challenges to us. But I mean, technology is one side, but maybe I will let Peter comment on the sales and finance discipline that we put in to help accompany the growth.
Yeah. I think that, I mean, what Michael is basically saying, in a nutshell, it’s a very complicated industry with a lot of different and the bad guys are always finding new ways to be bad guys and finding different ways into different companies situations.
I think the foresight that Michael and his brother, Ken, who’s our CEO, had in creating Fortinet 22 years ago is that, having the robustness in the operating system and the ability to run that operating system on custom ASICs that allow us to add more value to our product has differentiated us from the rest of the market.
You say a lot of things are going to the cloud. There’s a lot of cloud spending. We are platform agnostic. We don’t really care where you need to protect it. We would rather just protect it. And so our operating system works in the cloud, just like everybody else’s operating system, but it also works on premise.
And so it’s all about protecting the entire infrastructure, not just one part of the infrastructure and I think the challenge that companies have is if they use a vendor in the cloud for one thing and they use a different vendor on-premise, if they make any changes to the security rules in either one of those locations and it’s not running on the same operating system, they are going to leave themselves vulnerable.
So you want to have a holistic solution. Our operating system is really our secret sauce. The ability to add additional functionality is very important. But to your point, even on the macro side or on the cloud side is Fortinet or security is a must have, right? You have to have it. It’s not something you can put off and wait until next year to buy and so I think that’s really important.
There’s other drivers or differentiations in our business and not just the operating system, but we are a very diversified business, 70% of our revenue comes from outside of the United States. We grew up as an international based business. We have got 40% of our total business in the North America, which includes the U.S. and the Americas actually includes South America, 40% in Europe and 20% in Asia Pac.
And so it’s a very diversified business. Half our business is from 100 countries, no one of which is more than 3% of my billings. We are diversified by customer segment. We are diversified by product. So, again, we can provide your security in any one of those locations, geographies, premise, cloud, whatever and provide you a robust solution, because of the way they started this company 20 years ago.
That’s great. Certainly, the sophistication of cyber attacks has massively changed and increased over the last, call it, 10 years to 15 years and Fortinet has evolved as well. But I think one of the other changes that we have noticed with Fortinet is if you look even last quarter, you had 153 deals over $1 million. That was up 84% year-over-year. So you are not just selling to the smaller customers. What do you think is driving just the growth in these massive $1 million deals?
So I think from our -- because of the global footprint, right? We -- traditionally we do really well in the SMB and the commercial and we started to get a harder push into the enterprise, because we have the enterprise-ready platform.
And I think a lot of the enterprises, they find our messaging for consolidation resonating with their CISO and CIO teams. It’s -- in the past, we can see customers buying -- the firewall-centric customers buying a lot of the firewalls and managed firewall only.
But as you mentioned, over the last few years, because of the threat landscape change, what we find is relying on the firewall only will not provide enough protection for today’s distributing larger enterprise.
So what we found is that a lot of these enterprises, they started to actually understand the story and then they started to buy different components, it’s a firewall, but then it’s not traditionally just on-prem, but also there’s VM, in the cloud or in the private cloud, data center.
And then on top of that they have -- if they have perhaps an SD branch, they can have networking components in that to help with the visibility of the devices, and then, if there’s a same and sure and all kind of central management and visibility components.
So we see a lot of deals where the customers, they come in and buy 20, 30 different products, and then they love it because in the past, they have to buy that from 20, 30 different companies, meaning they have to get their CISO team trained on all these different user interfaces, come online and automation, it’s a nightmare.
And so I think essentially over the past few years, the consolidation message starts to resonate with the more and more enterprises, they come in and buy, for example, a complete solution from us, where we design them organically, usually from the very beginning to interoperate with each other and we call that platform Security Fabric.
So essentially, the center piece is still the multifunction firewall carry a lot of the features, the traditional SSL, SD-WAN and like the -- but also it includes components in the cloud, for example, like the SASE component, so we can secure the OT platform, if that customer has a component, as well as I think the more accurate is the ZTNA, the Zero Trust architecture.
So I think in the end, the value is we provide the customer with a single pane of glass, like, visibility. They see all these components like your alert and traps in one screen and then they can easily manage them to discover and mitigate the threats.
I would add, additional to the consolidation message of really kind of bringing products and vendors together into a single operating system, which again goes back to the value of our operating system is the concept of convergence.
And I think what you are seeing and what you have seen over the last five years is companies are reconfiguring their networks to do more cloud capabilities and then if you think about, go back five years, 10 years ago, cloud wasn’t a big part of their business. They set their networks up a certain way and now they need to change that.
As they are changing and reconfiguring their networks to be more cloud centric, or in this case, work-from-anywhere centric, given that we are all kind of working from other places these days, they are rethinking their security. They have to build their security now to deal with that new networking configuration, really kind of -- some of it goes back to Zero Trust, just don’t trust anybody in your network when you are doing it.
But what they are really saying is, look, our security operating system and our networking operating system used to be separate buying centers and those two buying centers are coming closer together and communicating more today than they ever have.
And in doing so, the networking guys have always been -- they basically have been thinking about how do I move data as fast as possible and as low cost as possible and the security guys have to worry about everything else.
They have to worry about the sender, the recipient, the content, the device, all of these other things, which again goes back to why the ASIC strategy is so important, because you have to do so much compute capabilities that the security guys -- the network guys will get mad at the security guys, because the security guys would slow them down and the security guys will get mad at the networking guys, because the networking guys didn’t care about anything what was moving around and paying attention to it.
Those two groups are coming closer together and they are converging. SD-WAN is an example of that conversion. We call it Secure SD-WAN, because it’s built into our operating system and sold with our firewalls. So you get security and networking functionality built into a single unit. A lot of our security competitors don’t have that networking capability or understanding. We have built both of that into our operating system.
Another point to make though, because I think, we somehow get -- well, I know why, we get pigeon holed into being a hardware company, 60% of our revenue today is services. I would call it a hybrid SaaS model and the only reason it’s down to 60% is because over the last couple of years with COVID and supply chain and everything else that’s been going on, we have had some price increases to offset cost increases that we have been dealing with.
The percentage or mix of product versus services prior to COVID was 65% services, 35% product. Less last quarter, it was 60% services, 40% product. Over time, the services will catch up to the price increases. Right now, they are dropped on the balance sheet in our deferred revenue. As that happens over time, you are going to see our services go back to that 65% at an 85% gross margin and so there’s value in those services that we can’t lose sight of even though I know a lot of people and we do as well talk a lot about the hardware.
That makes sense. So you have got the trends of convergence between network and security driving demand. You have got the need for consolidation to ripping out point products and consolidating to a single platform and then you have also got an increasingly sophisticated threat landscape driving demand. I mean that certainly doesn’t sell itself or sell your products yourself. So have you made any changes as well to your sales force that can continue driving these large million dollar deals, have you had to make any changes from that end?
Yeah. Of course. So I think both on the sales and marketing side. For marketing, you guys probably know that we started to sponsor the Fortinet Championship, the PGA event since last year in Napa, California.
So I think one thing is on the lead gen, I mean, there’s like a ton of numbers that just basically showing like these marketing helps. But also I think on the branding side, I mean, I play golf as a hobby, but I think I have met more people know about us from the golf than from the cybersecurity side. So it’s a very just powerful like marketing method.
And I think on the sales side, obviously, I think, since a couple of years ago when we saw the opportunity, we started really invested into hiring a lot of salespeople. But I think at the end, it’s not just hiring them, but also be able to tell the story, right?
And then I think, particularly in our industry, this is a challenge, a lot of times, people just think it’s one and plus another one, then you get two. But in our consolidation story, a lot of times, you have got one plus one, but you get more than two as a result.
So I will provide you one example of that. Like for example, a lot of people, they want the segmentation story in their offices, they want the firewall with the switches and access points. Now these, you can individually procure from different companies.
However, when they do from us, our salespeople can tell them how easy it is to set it up so that they can segment their office network dynamically almost with no additional steps from just managing some policies. While in the old days, like if you are familiar with the like the NAC concept from Cisco.
I remember they did a demo a few years back requires like six different components and there’s a lot of CDs and downloads. So it’s -- I think at the end, the consolidation can produce more productivity for the customers.
And then, I think, from a sales and marketing perspective, the challenge has always been how to demo that and then tell the story. Once we can get a story out, and then our cost rate is really, really high.
And to provide a sense, I joined in January of 2018, I think, we had about 5,000 people at the time. This last quarter, we ended with 13,000 worldwide employees, 70% of which are outside of the United States.
I think the other thing to think about in terms of the business, to your point, on the $1 million-plus deals. In 2018, we looked at, because we are -- there was a change in 2017 that occurred in this business and that is we moved into the Leader Quadrant for enterprise firewalls for the first time in the company’s history. We had always been a leader in the UTM Magic Quadrant, which was a separate quadrant at the time and that was sort of synonymous with SMB and small and medium-sized businesses.
When we moved into the enterprise business in 2017 -- July of 2017, we started using that as a calling card. You could go into an enterprise customer, or at least get invited into an RFP now because you were in the Leader Quadrant. And so in 2018, we really started to push that message.
But we looked at how many companies an individual enterprise sales rep was assigned to and it came down to 65:1. I am like, okay, that’s not an enterprise sales force. We need to do something about that.
But we also had growth in margin profitability targets out there out to 2022, that said, we would grow in sort of the 15% to 20% range, and we would grow our margins from what we are mid-teens at the time to 25% by 2022 and that it would grow at about 150 basis points to 200 basis points a year.
So we couldn’t go out and hire all enterprise salespeople at once. We hired them over time. If you look today, that ratio is about 14:1 enterprise salespeople to companies. That should be in the single digits and so we will continue to hire more people, but -- and grow that enterprise or that large business.
But what’s really interesting, though, is we have a -- we have a small- and medium-sized enterprise business. We have a two tier distribution model. We sell the distributors. They sell the resellers who sell to the customers.
That reseller or that channel relationship is extremely important to us, because a lot of our small- and medium-sized business dealings and deals, we don’t touch, right? They just go through the channel. It’s a run rate sort of business.
We hear a lot of chatter about it back in 2020 when COVID first hit. Everyone was thinking about small- and medium-sized businesses going out of business and it’s third of Fortinet’s business, therefore, they are going to fall apart. It didn’t happen.
The small- and medium-sized businesses continue to need security. They continue to buy security. We are hearing that rumbling again today with macro concerns that you have this SMB exposure.
That has been a strong run rate cash cow business for us since I have been there for the five years, and we have been using that cash to fund our enterprise business and hire more enterprise salespeople within the growth and profitability parameters that we provided to the street.
So it sounds like, I mean, the Fortinet Championship was an amazing event. You have got a lot more marketing spend around that, bringing more awareness to Fortinet, hiring a lot more salespeople. But if you look back over the last, call it, two years, three years, the firewall market certainly looks like it’s gone from a four-horse race down to a two-horse race and Cisco and Check Point are clearly underperforming relative to Fortinet and Palo Alto. Do you think that could be just, number one, I guess, why do you think they have been ceding market share to Fortinet and do you think that’s also maybe fueling some of that record growth you have seen over the last 18 months?
Yeah. So I think the -- one of the changes I noticed before the Fortinet Championship is a lot of time I walk in the room with our salespeople and customers, the first question is like, we call the Forti who question, like, who are you guys? And then so I think after that, the PGA event, I think, we are hearing less and less of those. So the brand name is out there, and then, obviously, there’s still a lot of work to explain the technology advantages.
And I think over the years, I think, there are a few drivers on the firewall. One is the continued expanding threat surface. There’s a lot of the assets when the customer didn’t think a firewall was even needed, right, the smaller offices, home offices, but today, I think, if there’s critical assets or computing devices, those would be as precious as the computers in the HQ or in the data center because with SD-WAN or VPN, they are all connected.
And I think the second driver is basically, I think, on networking side, the speed is still ever increasing. So going back when we started off we were designing for like 10, 100, those are megabits per second devices and now it’s like 400 gigabits, right?
So like it’s kind of like Moore’s Law. So we are seeing that every maybe five years or six years, we have to redesign our ASICs, so basically provides 5 times, 6 times more performance than the last one. So I think that also helps to drive the demand.
And then the -- well, the third one is, obviously, the hackers, they change their tactics and then basically requiring a different architecture. I think that continues to drive the demand. So basically, over the years, we are building the features like SD-WAN and Zero Trust. Those are not traditional firewall features.
But because we take a holistic approach, basically how we design the product to help the customer and now this kind of become part of the features and I think our customer realized the value in that. So that helps the adoption and continued consolidation.
I think there’s one more driver that’s been occurring recently and that is insurance companies. Cyber insurance is very difficult to get. We met with -- our CFO met with a cyber insurance company that does cyber and basically, he told -- the insurance company told them that they turn down 95% of the policy request they receive for cyber insurance. That’s not a cyber insurance business by the way.
It’s not -- but they can’t -- they are trying to understand the risk of -- they really -- a lot of the insurance companies got hurt in the early days of ransomware because they didn’t understand how to completely monetize or calculate what their risks were.
And the bad guys were basically going into systems, looking up your cyber insurance, seeing what your limit was and then coming back and saying, oh, your limit is $1 million, guess what our ransom is and the insurance companies were paying it out.
So cyber insurance right now is a lot of insurance companies are looking at what their risks are. They are dictating to companies that they have to have, not the company specifically, but the types of security. You need to have endpoint security. You need to have this.
So they are starting to dictate what companies have to do. So Boards are being creating -- committees and Boards are being created just to study cyber because of that risk for different enterprises. So I think that’s going to help drive it.
Go back to your question about the Magic Quadrant and the market share. If you look five years ago, who -- what companies were in the leader quadrant and where they were five years ago for enterprise firewalls and who’s there today, Palo and Fortinet has moved up into the right and we have actually moved further up to the right than they have and Cisco, Check Point and others are slowly dropping away to the left. So you are right, it is becoming a two-horse race.
But that’s -- but more importantly, if you look at from a third-party perspective from just Magic Quadrants, we are in seven or eight different Gartner Magic Quadrants, two of leader, SD-WAN and firewall.
We are in six other -- five or six other ones, we are in one of the other quadrants. We are in another eight market guides, which are either products that are on their way to become a Magic Quadrant or on their way down from becoming a Magic Quadrant.
But why I point that out is that’s 15 different research reports that Gartner publishes that we are mentioned in and with one operating system. The same operating system across all 15 products. It goes back to the consolidation conversation a minute ago.
If you think about how many unique companies are listed in those different Gartner products, uniquely, it’s probably 100 companies. I don’t have to take a lot of market share from all of them. I just have to take a little market share from all of them and I am going to be the only one that goes across all 15 products because of our operating system and Michael’s vision of putting that into a platform and making that work.
That was a great overview. So let’s just drill down into it into one of the areas of your operating system. So SD-WAN has been a big driver. You said it’s part of the firewall, it’s part of the operating system. So if you buy a firewall from Fortinet, you get SD-WAN with it. I think the way I think of SD-WAN has always been, it’s really just like a Google Maps where it’s finding the most efficient route from point A to point B over the broader Internet, so you don’t have to buy expensive private links. Yet at the start of the pandemic, when everyone was working remotely and SD-WAN was clearly seeing an uptick, we are three years past that now and you are still seeing 45% growth in SD-WAN business. So I am just curious like what’s sustaining that demand, it’s -- we are already past the obvious catalyst of the pandemic, how are you maintaining that strong growth?
I think there’s maybe a few ways to look at that. I think from SD-WAN perspective, we find there’s a pretty good market for enterprises with very distributed workforce around world and then they can set up, there’s like underlay and overlay, help them to basically get the quality of the traditionally very expensive MPLS services from the carrier.
So I think the whole sort of industry is shifting towards adopting SD-WAN. I think we are still in the curve that there’s like more and more adoption and we are in a unique place, like, we are building the security SD-WAN where the customer adopting that solution will be -- get both security, as well as the top notch SD-WAN.
But I think before I forget, there’s actually one more very important aspect which is the -- well, it’s -- you may not see it as a sustainability aspect, because we have the purpose-built ASIC device, it’s very power efficient.
So in fact, recently, a lot of the large enterprise and carriers, they pointed to us by deploying our solutions both in the on-prem locations in the cloud, because they can run ASIC-based, a very powerful device, they are seeing the power usage, including data center and the on-prem, our solution is a fraction of what the traditional software only based solution. So I mean there’s -- I don’t think we are reaching the end of the SD-WAN growth curve. I think we are in the middle of it. There’s still a ton of opportunities out there.
I think the energy consumption was 80% less than a common CPU in terms of our ASICs -- our dedicated ASICs.
Okay. Another interesting growth driver on OT security, you briefly touched on it earlier, OT security securing devices that might not be able to support a software agent I think it’s really difficult, it has to be done from a network device or within the network. You had 75% year-over-year growth in OT security last quarter, I am just curious, if a customer wants to buy Fortinet OT security, what are they purchasing?
So it’s -- I think it’s -- conception is similar to the IT side. It’s basically the platform. It usually involves one or another form of the firewall. But sometimes it operates in a slightly different way in the OT environment and then it could involve in like the switch components.
And they have physical challenges, a lot of the times, it’s wide temperature range, 40 below temperature up to maybe 70 degrees, 80 degrees and with a strong SOR [ph], the moisture requirements.
And then I think in the software wise, they need specialized software, understanding like things like Modbus, kind of difficult to decide for OT protocols as well as the central pieces of control, how you contain the threats, discover like a SIM or like SOR like solution. I mean it’s not so different from the composition of the solution, but then, usually, each piece carries a slightly different flavor to specifically address OT challenges.
So you have got a SIM software and a more durable firewall and it sounds like a network switch that people would have to deploy to get your OT security?
Those are the most commonly seen ones, yeah.
I know we are running out of time real quick. When I got there in January of 2018, I know Ken was talking about OT back then. We are building OT capabilities to do that security five years, six years ago.
And so it’s just now that, that market is starting to ramp up as more of these things are getting connected, some of it’s a 5G world, so more things are getting connected and they need to be protected. And so it’s something we have been focusing on, again, building into our operating system for years.
All right. Well, we are running out of time. So what would you leave the audience with in terms of what you are most excited about in 2023?
I want to just quickly touch on one of the courses that dear to my heart is the sustainability efforts that we put in. So at Fortinet we have formed the Board level committee, we call the Social Responsibility Committee and I volunteer to lead that committee.
Basically, we have overwhelming responses from our employees to putting a lot of initiatives through our sustainability aspects. For example, we pledged the greenhouse gas emission, zero carbon for Scope 1 and 2 by 2030 and we also work with our suppliers on human rights policies and then we work on our packaging to make sure we got rid of those plastics and we replace them with the biodegradable packaging, so that they don’t leave like long lasting garbage to the planet.
Also, I think I touched earlier our ASIC design and we have a lot of technologies and innovations came from our employees help not just for us, but also for our customers to reduce the carbon output.
And then, I think, eventually, we have a lot of initiatives on these and we see that as one of the core strategies that we are going to carry forward, not just grow the business, but also grow it social responsibility.
That’s great. On behalf of everyone at Wells Fargo thank you so much for coming to the conference and sharing your thoughts today.
Thank you, Andrew.
Yeah. Thank you.
MicrosegmentationThe microsegmentation Market is expected to reach $3,032.3 million by 2027.” - Coherent Market Insights
SAN FRANCISCO, CALIFORNIA, UNITED STATES, December 9, 2022 /einpresswire.com / -- Report Summary:
The Microsegmentation Market Research Report offers extensive information on the following courses - Industry size, share, growth, segmentation, manufacturers and progress, main trends, market drivers, challenges, standardization, deployment models, opportunities, strategies, future road maps, and Annual forecast till 2030 provides a complete study of the global Microsegmentation Market.
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The potential of this industry field has been thoroughly examined, despite significant market constraints. The current situation of the global Microsegmentation Market 2022 industry is completely examined in this research report. Key market tactics such as product development, partnership, integrations, and acquisitions will also be investigated. Upstream raw materials and equipment are also analyzed, as well as downstream demand.
According to our most accurate analysis (Coherent market insights), The global Microsegmentation market is estimated to account for US$ 3,032.3 Million by 2027
The study focuses on the biggest, most significant market participants and gives information about them, including business profiles, product details, expenses, prices, and contacts. In this study, statistics on the company's expansion are covered along with the main segmentation aspects that contribute to the worldwide Microsegmentation Market's success in the current climate. The report also emphasizes the importance of regional categorization in the global Microsegmentation Market. Due to increasing demand, the worldwide market for Microsegmentation Market's will eventually be more profitable and larger than expected.
The Major Players Profiled In This Report Include:
. Cisco Systems Inc. (US)
. Akamai Technologies, Inc.
. Palo Alto Networks, Inc.
. Symantec Corporation
. Okta, Inc.
. Forcepoint, LLC
. Cyxtera Technologies
. Sophos Group Plc
. Google LLC
. Microsoft, Inc.
. VMware Inc.
. Trend Micro Incorporated
. IBM Corporation
. Check Point Software Technologies Ltd.
. vArmour, Inc.
. OPAQ Networks, Inc.
. ExtraHop Networks
. Bracket Computing Inc.
Scope of the report:
The product portfolio, application domain, and regional distribution are used to segment the Microsegmentation Market. Each sector, region, and country's market share, growth rate, and valuation are also provided. The report also contains prospective trends, limiting issues, and driving factors that are anticipated to support revenue input by category and location over the next few years.
Drivers and Restraints:
The Microsegmentation Market drivers have been recognized for their ability to explain how their efforts can affect the market's overall growth during the predicted period. In order to determine likely future developments in the sector, a full assessment of the relevance of the driving forces and potential impediments that market participants may face in the Microsegmentation Market is done. The Microsegmentation Market's limitations may draw attention to concerns that could stymie the traditional market's growth. Businesses should be able to extend their problem solving solutions as a result of understanding the Microsegmentation Market's negative parts, which will increase their ability to change the gloomy viewpoint.
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Cumulative Consequences of the Russian-Ukrainian Conflict (2022):
We are constantly monitoring and updating our findings on the political and economic chaos caused by Russia's invasion of Ukraine. Adverse impacts are widely anticipated around the world, particularly in Eastern Europe, the European Union, East and Central Asia, and the United States. The dispute has had a significant impact on people's lives and livelihoods, and it has caused broad disruption in trade patterns. The possible impact of war and uncertainty in Eastern Europe is projected to have a negative influence on the global economy, with Russia bearing a particularly heavy burden in the long run. This study outlines his recommendations for the Microsegmentation Market industry, taking into account Supply and Demand Impacts, Pricing Variations, Vendor Strategic Adoption. and the most accurate information on conflicts and worldwide responses.
Global Microsegmentation Market, By Component:
Global Microsegmentation Market, Services:
Global Microsegmentation Market, Security:
Global Microsegmentation Market, Deployment Type:
Global Microsegmentation Market, Organization Size:
Global Microsegmentation Market, Vertical:
Government & Defense
IT & Telecom
Energy & Utility
The following regions are examined in terms of production, consumption, revenue, market share, growth rate, and projections in the report:
- North America (United States, Canada and Mexico)
- Europe (Germany, UK, France, Italy, Russia and Spain etc.)
- Asia Pacific (China, Japan, Korea, India, Australia and Southeast Asia etc.)
- South America (Brazil, Argentina and Chile etc.)
- Middle East & Africa (South Africa, UAE and Saudi Arabia etc.)
Key highlights of the study:
This study examines the global Microsegmentation Market in depth, providing market size (US$ Million) and compound annual growth rate (CAGR%) for the forecast period (2022-2030), with 2021 as the base year.
It presents appealing investment proposition matrices for this market and elucidates prospective revenue prospects across various categories.
This analysis also provides important insights into market drivers, constraints, opportunities, new product launches or approvals, market trends, geographical outlook, and competitive strategies employed by leading competitors.
It covers key players in the worldwide Microsegmentation Market based on the following parameters: business highlights, product portfolio, important highlights, financial performance, and strategies.
In this study, significant companies such as: Cisco Systems Inc. (US), Akamai Technologies, Inc., Palo Alto Networks, Inc., Symantec Corporation, Okta, Inc., Forcepoint, LLC, Cyxtera Technologies, Sophos Group Plc, Google LLC, Microsoft, Inc., VMware Inc., Trend Micro Incorporated, Cloudflare, IBM Corporation, Fortinet, Check Point Software Technologies Ltd., Unisys, vArmour, Inc., OPAQ Networks, Inc., ExtraHop Networks, ShieldX, Bracket Computing Inc., Nutanix, and Cloudvisory.
Insights from this research will enable marketers and company executives to make informed decisions about future product releases, type upgrades, market expansion, and marketing approaches
The worldwide Microsegmentation Market research addresses a wide range of industry stakeholders, including investors, suppliers, product manufacturers, distributors, new entrants, and financial analysts
The different strategy matrices employed in studying the global Microsegmentation Market will make decision-making easier for stakeholders.
Does this report provide customization?
Yes. Customization assists businesses in gathering information into specific market segments and areas of interest. As a result, Coherent Market Insights provides customized report information based on corporate requirements for strategic calls.
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Detailed Table of Contents:
1 Microsegmentation Market Overview:
1.1 Product Overview and Scope of Microsegmentation Market
1.2 Segment by Type
1.3 Global Segment by Application
1.4 Global Market, Region Wise (2017-2022)
1.5 Global Market Size of Microsegmentation Market (2017-2029)
2 Global Microsegmentation Market Landscape by Player:
2.1 Global Microsegmentation Market Sales and Share by Player (2017-2022)
2.2 Global Revenue and Market Share by Player (2017-2022)
2.3 Global Average Price by Player (2017-2022)
2.4 Global Gross Margin by Player (2017-2022)
2.5 Manufacturing Base Distribution, Sales Area and Product Type by Player
2.6 Market Competitive Situation and Trends
3 Microsegmentation Market Upstream and Downstream Analysis:
3.1 Industrial Chain Analysis
3.2 Key Raw Materials Suppliers and Price Analysis
3.3 Key Raw Materials Supply and Demand Analysis
3.4 Manufacturing Process Analysis
3.5 Market Concentration Rate of Raw Materials
3.6 Downstream Buyers
3.7 Value Chain Status Under COVID-19
4 Microsegmentation Market Manufacturing Cost Analysis:
4.1 Manufacturing Cost Structure Analysis
4.2 Microsegmentation Market Key Raw Materials Cost Analysis
4.3 Labour Cost Analysis
4.4 Energy Costs Analysis
4.5 Research and Development Costs Analysis
5 Microsegmentation Market Market Dynamics:
5.2 Restraints and Challenges
5.3.1 Advances in Innovation and Technology for Microsegmentation Market
5.3.2 Increased Demand in Emerging Markets
5.4 Microsegmentation Market Industry Development Trends under COVID-19 Outbreak
5.4.1 Global COVID-19 Status Overview
5.4.2 Influence of COVID-19 Outbreak on Microsegmentation Market Industry Development
5.5 Consumer behaviour Analysis
6 Research Findings and Conclusion:
7.2 Research Data Source
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