Fortinet Reports Second Quarter 2016 Financial Results
Revenue and Billings Outperformance Highlights Fortinet's Best-in-Class Security Fabric
/EINPresswire.com/ -- SUNNYVALE, CA--(Marketwired - July 28, 2016) - Fortinet (NASDAQ: FTNT) -
- Revenue of $311.4 million, up 30% year over year
-
Billings of $373.8 million, up 26% year over year
1 - GAAP diluted net loss per share $0.01
-
Non-GAAP diluted net income per share of $0.14
1 - Cash flow from operations of $67.9 million
-
Free cash flow of $53.5 million
1 - Cash, cash equivalents and investments of $1.22 billion
- Deferred revenue of $904.0 million, up 37% year over year
Fortinet® (NASDAQ: FTNT), a global leader in high performance cyber security solutions, today announced financial results for the second quarter ended June 30, 2016.
"We are pleased with our billings and revenue over performance and ability to meet our expense and profitability targets while still investing for growth," said Ken Xie, founder, chairman and chief executive officer. "The threat landscape and network architectures are evolving and shifting to integrated end-to-end platforms, which is the vision Fortinet was founded upon. Our strong innovation and ability to provide a seamless, tightly-integrated and intelligent Security Fabric that protects all points in the network -- from IoT to cloud -- positions us well for continued growth and share gains in 2016 and beyond."
Financial Highlights for the Second Quarter of 2016
- Revenue: Total revenue was $311.4 million for the second quarter of 2016, an increase of 30% compared to $239.8 million in the same quarter of 2015. Within total revenue, product revenue was $136.6 million, an increase of 19% compared to $114.8 million in the same quarter of 2015. Service revenue was $174.8 million, an increase of 40% compared to $125.0 million in the same quarter of 2015.
-
Billings
1 : Total billings were $373.8 million for the second quarter of 2016, an increase of 26% compared to $297.2 million in the same quarter of 2015.
- Deferred Revenue: Total deferred revenue was $904.0 million as of June 30, 2016, an increase of $66.8 million compared to $837.2 million as of March 31, 2016.
-
Cash and Cash Flow: As of June 30, 2016, cash, cash equivalents and investments were $1.22 billion, compared to $1.19 billion as of March 31, 2016. In the second quarter of 2016, cash flow from operations was $67.9 million compared to $84.3 million in the same quarter of 2015. Free cash flow
1 was $53.5 million during the second quarter of 2016 compared to $73.5 million in the same quarter of 2015.
- GAAP Operating Income or Loss: GAAP operating loss was $4.0 million for the second quarter of 2016, representing a GAAP operating margin of -1%. GAAP operating income was $3.0 million for the same quarter of 2015, representing a GAAP operating margin of 1%.
-
Non-GAAP Operating Income
1 : Non-GAAP operating income was $36.0 million for the second quarter of 2016, representing a non-GAAP operating margin of 12%. Non-GAAP operating income was $29.3 million for the same quarter of 2015, representing a non-GAAP operating margin of 12%.
- GAAP Net Income or Loss and Diluted Net Income or Loss Per Share: GAAP net loss was $1.4 million for the second quarter of 2016, compared to GAAP net income of $0.8 million for the same quarter of 2015. GAAP diluted net loss per share was $0.01 for the second quarter of 2016. GAAP diluted net income per share was break-even for the second quarter of 2015.
-
Non-GAAP Net Income and Diluted Net Income Per Share
1 : Non-GAAP net income was $24.0 million for the second quarter of 2016, compared to non-GAAP net income of $19.4 million for the same quarter of 2015. Non-GAAP diluted net income per share was $0.14 for the second quarter of 2016, compared to $0.11 for the same quarter of 2015.
Conference Call Details
Fortinet will host a conference call today, July 28, 2016, at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to discuss its financial results. To access this call, dial (877) 303-6913 (domestic) or (224) 357-2188 (international) with conference ID # 25654626. A live webcast of the conference call and supplemental slides will be accessible from the Investor Relations page of Fortinet's website at http://investor.fortinet.com and a replay will be archived and accessible at http://investor.fortinet.com/events.cfm. A replay of this conference call can also be accessed through August 4, 2016, by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) with conference ID# 25654626.
Following Fortinet's financial results conference call, the Company will host an additional question-and-answer session at 3:30 p.m. Pacific Time (6:30 p.m. Eastern Time) to provide an opportunity for financial analysts and investors to ask more detailed questions. To access this call, dial (877) 303-6913 (domestic) or (224) 357-2188 (international) with conference ID # 25664452. This follow-up call will be webcast live and accessible at http://investor.fortinet.com, and a replay will be archived and available after the call at http://investor.fortinet.com/events.cfm. A replay of this conference call will also be available through August 4, 2016 by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) with conference ID # 25664452.
About Fortinet (www.fortinet.com)
Fortinet (NASDAQ: FTNT) secures the largest enterprise, service provider, and government organizations around the world. Fortinet empowers its customers with intelligent, seamless protection across the expanding attack surface and the power to take on ever-increasing performance requirements of the borderless network -- today and into the future. Only the Fortinet Security Fabric architecture can deliver security without compromise to address the most critical security challenges, whether in networked, application, cloud or mobile environments. More than 280,000 customers worldwide trust Fortinet to protect their businesses. Learn more at http://www.fortinet.com, the Fortinet Blog, or FortiGuard Labs.
Copyright © 2016 Fortinet, Inc. All rights reserved. The symbols ® and ™ denote respectively federally registered trademarks and unregistered trademarks of Fortinet, Inc., its subsidiaries and affiliates. Fortinet's trademarks include, but are not limited to, the following: Fortinet, FortiGate, FortiGuard, FortiManager, FortiMail, FortiClient, FortiCloud, FortiCare, FortiAnalyzer, FortiReporter, FortiOS, FortiASIC, FortiWiFi, FortiSwitch, FortiVoIP, FortiBIOS, FortiLog, FortiResponse, FortiCarrier, FortiScan, FortiAP, FortiDB, FortiVoice and FortiWeb. Other trademarks belong to their respective owners.
FTNT-F
Forward-looking Statements
This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding market adoption of cybersecurity and expectations regarding positioning for market share gains and growth potential. Although we attempt to be accurate in making forward-looking statements, it is possible that future circumstances might differ from the assumptions on which such statements are based. Important factors that could cause results to differ materially from the statements herein include the following: general economic risks; global economic conditions and foreign currency risks; increasing competitiveness in the security market; the dynamic nature of the security market; specific economic risks worldwide and in different geographies, and among different customer segments; uncertainty regarding increased business and renewals from existing customers; uncertainties around continued success in sales growth and market share gains; longer sales cycles, particularly for larger enterprise customers; failure to convert sales pipeline into final sales; risks associated with successful implementation of multiple integrated software products and other product functionality risks; execution risks around new product development and introductions, and innovation and market acceptance of new products; litigation and disputes and the potential cost, distraction and damage to sales and reputation caused thereby; market acceptance of new products and services; the ability to attract and retain personnel; changes in strategy; risks associated with management of growth; lengthy sales and implementation cycles, particularly in larger organizations; technological changes that make our products and services less competitive; risks associated with the adoption of, and demand for, our products and services in general and by specific customer segments; competition and pricing pressure; risks related to integrating acquisitions; and the other risk factors set forth from time to time in our most recent Annual Report on Form 10-K, our most recent Quarterly Report on Form 10-Q and our other filings with the SEC, copies of which are available free of charge at the SEC's website at www.sec.gov or upon request from our investor relations department. All forward-looking statements herein reflect our opinions only as of the date of this release, and we undertake no obligation, and expressly disclaim any obligation, to update forward-looking statements herein in light of new information or future events.
Non-GAAP Financial Measures
We have provided in this release financial information that has not been prepared in accordance with Generally Accepted Accounting Principles (GAAP). These non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies. We use these non-GAAP financial measures internally in analyzing our financial results and believe they are useful to investors, as a supplement to GAAP measures, in evaluating our ongoing operational performance. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial results with peer companies, many of which present similar non-GAAP financial measures to investors.
Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures provided in the financial statement tables below.
Billings. We define billings as revenue recognized in accordance with GAAP plus the change in deferred revenue from the beginning to the end of the period less any deferred revenue balances acquired from business combination(s) during the period. We consider billings to be a useful metric for management and investors because billings drives future revenue, which is an important indicator of the health and viability of our business. There are a number of limitations related to the use of billings instead of GAAP revenue. First, billings include amounts that have not yet been recognized as revenue. Second, we may calculate billings in a manner that is different from peer companies that report similar financial measures. Management accounts for these limitations by providing specific information regarding GAAP revenue and evaluating billings together with GAAP revenue.
Free cash flow. We define free cash flow as net cash provided by operating activities minus capital expenditures such as purchases of property and equipment. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after the acquisition of property and equipment, can be used for strategic opportunities, including investing in our business, making strategic acquisitions, repurchasing outstanding common stock, and strengthening the balance sheet. Analysis of free cash flow facilitates management's comparison of our operating results to those of our peer companies. A limitation of using free cash flow rather than the GAAP measure of net cash provided by operating activities as a means for evaluating liquidity is that free cash flow does not represent the total increase or decrease in the cash, cash equivalents and investments balance for the period because it excludes cash provided by or used for other investing and financing activities. Management accounts for this limitation by providing information about our capital expenditures and other investing and financing activities on the face of the cash flow statement and under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" in our most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K.
Non-GAAP operating income and operating margin. We define non-GAAP operating income as operating income or loss plus stock-based compensation, business acquisition-related charges, including inventory fair value adjustment amortization and other purchase accounting adjustments, impairment and amortization of acquired intangible assets, restructuring charges, expenses associated with the implementation of a new Enterprise Resource Planning (ERP) system, and, when applicable, any other significant non-recurring items in a given quarter. Non-GAAP operating margin is defined as non-GAAP operating income divided by GAAP revenue. We consider these non-GAAP financial measures to be useful metrics for management and investors because they exclude the items noted above so that our management and investors can compare our recurring core business operating results over multiple periods. There are a number of limitations related to the use of non-GAAP operating income instead of operating income or loss calculated in accordance with GAAP. First, non-GAAP operating income excludes the items noted above. Stock-based compensation has been and will continue to be, for the foreseeable future, a significant recurring expense in our business. Second, stock-based compensation is an important part of our employees' compensation and may impact their performance. Third, the components of the costs that we exclude from our calculation of non-GAAP operating income may differ from the components that peer companies exclude when they report their non-GAAP results of operations. Management accounts for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP operating income and evaluating non-GAAP operating income together with operating income or loss calculated in accordance with GAAP.
Non-GAAP net income and diluted net income per share. We define non-GAAP net income as net income plus the items noted above under non-GAAP operating income and operating margin, adjusted for the impact of the tax adjustment, if any required, resulting in an effective tax rate on a non-GAAP basis, which often differs from the GAAP effective tax rate. We define non-GAAP diluted net income per share as non-GAAP net income divided by the non-GAAP diluted weighted-average shares outstanding. We consider these non-GAAP financial measures to be useful metrics for management and investors for the same reasons that we use non-GAAP operating income and non-GAAP operating margin. However, in order to provide a complete picture of our recurring core business operating results, we include in non-GAAP net income and non-GAAP diluted net income per share, the tax adjustment required resulting in an effective tax rate on a non-GAAP basis, which often differs from the GAAP tax rate. We believe the effective tax rates we used are reasonable estimates of normalized tax rates for our current and prior fiscal years under our global operating structure. The same limitations described above regarding our use of non-GAAP operating income and non-GAAP operating margin apply to our use of non-GAAP net income and non-GAAP diluted net income per share. We account for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP net income and non-GAAP diluted net income per share and evaluating non-GAAP net income and non-GAAP diluted net income per share together with net income (loss) and diluted net income per share calculated in accordance with GAAP.
FORTINET, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)
June 30, December 31,
2016 2015
---------- ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 596,380 $ 543,277
Short-term investments 388,388 348,074
Accounts receivable -- net 254,379 259,563
Inventory 81,247 83,868
Prepaid expenses and other current assets 33,490 35,761
---------- ------------
Total current assets 1,353,884 1,270,543
LONG-TERM INVESTMENTS 237,223 272,959
DEFFERRED TAX ASSETS 180,782 119,216
PROPERTY AND EQUIPMENT -- net 125,636 91,067
OTHER INTANGIBLE ASSETS -- net 31,488 17,640
GOODWILL 14,235 4,692
OTHER ASSETS 16,930 14,393
---------- ------------
TOTAL ASSETS $1,960,178 $ 1,790,510
========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 56,920 $ 61,500
Accrued liabilities 32,901 33,028
Accrued payroll and compensation 70,787 61,111
Income taxes payable 8,161 8,379
Deferred revenue 563,195 514,652
---------- ------------
Total current liabilities 731,964 678,670
DEFERRED REVENUE 340,786 276,651
INCOME TAXES LIABILITIES 66,304 60,624
OTHER LIABILITIES 16,498 19,188
---------- ------------
Total liabilities 1,155,552 1,035,133
STOCKHOLDERS' EQUITY:
Common stock 172 171
Additional paid-in capital 744,922 687,658
Accumulated other comprehensive income (loss) 724 (933)
Retained earnings 58,808 68,481
---------- ------------
Total stockholders' equity 804,626 755,377
---------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,960,178 $ 1,790,510
========== ============
FORTINET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share amounts)
Three Months Ended Six Months Ended
------------------ -------------------
June 30, June 30, June 30, June 30,
2016 2015 2016 2015
-------- -------- -------- --------
REVENUE:
Product $136,641 $114,777 $261,213 $212,286
Service 174,750 125,008 334,754 240,385
-------- -------- -------- --------
Total revenue 311,391 239,785 595,967 452,671
-------- -------- -------- --------
COST OF REVENUE:
Product (1) 52,788 47,397 102,101 88,765
Service (1) 31,715 22,101 60,046 44,335
-------- -------- -------- --------
Total cost of revenue 84,503 69,498 162,147 133,100
-------- -------- -------- --------
GROSS PROFIT:
Product 83,853 67,380 159,112 123,521
Service 143,035 102,907 274,708 196,050
-------- -------- -------- --------
Total gross profit 226,888 170,287 433,820 319,571
-------- -------- -------- --------
OPERATING EXPENSES:
Research and development (1) 45,502 37,389 90,256 73,205
Sales and marketing (1) 162,694 111,928 308,797 212,537
General and administrative (1) 22,184 18,018 41,623 29,979
Restructuring charges 553 - 881 -
-------- -------- -------- --------
Total operating expenses 230,933 167,335 441,557 315,721
-------- -------- -------- --------
OPERATING INCOME (LOSS) (4,045) 2,952 (7,737) 3,850
INTEREST INCOME 1,705 1,364 3,451 2,786
OTHER EXPENSE -- net (1,350) (830) (2,662) (1,507)
-------- -------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES (3,690) 3,486 (6,948) 5,129
PROVISION FOR (BENEFIT FROM) INCOME
TAXES (2) (2,302) 2,694 (7,678) 2,777
-------- -------- -------- --------
NET INCOME (LOSS) $ (1,388) $ 792 $ 730 $ 2,352
======== ======== ======== ========
Net income (loss) per share:
Basic $ (0.01) $ - $ - $ 0.01
======== ======== ======== ========
Diluted $ (0.01) $ - $ - $ 0.01
======== ======== ======== ========
Weighted-average shares outstanding:
Basic 172,075 169,930 171,910 169,009
======== ======== ======== ========
Diluted 172,075 176,234 175,360 174,983
======== ======== ======== ========
(1) Includes stock-based
compensation as follows:
Cost of product revenue $ 298 $ 210 $ 578 $ 350
Cost of service revenue 2,123 1,660 4,257 3,292
Research and development 7,458 5,541 14,601 10,698
Sales and marketing 16,990 11,271 32,805 20,578
General and administrative 3,478 3,078 7,008 5,764
-------- -------- -------- --------
$ 30,347 $ 21,760 $ 59,249 $ 40,682
======== ======== ======== ========
In March 2016, the Financial Accounting Standards Board issued Accounting
Standard Update ("ASU") No. 2016-09, which allows a company to make a
policy election to account for forfeitures as they occur. We early adopted
this standard and elected to account for forfeitures as they occur using
the modified retrospective transition method. The adoption of this
standard resulted in a decrease of $2.0 million in our share-based
compensation during the first quarter of 2016. The adjustment was
reflected in the six-months ended June 30, 2016 condensed consolidated
statement of operations.
(2) The adoption of ASU 2016-09 resulted in a decrease of $3.6 million in
our provision for income taxes during the first quarter of 2016. The
adjustment was reflected in the six-months ended June 30, 2016 condensed
consolidated statement of operations.
FORTINET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited, in thousands)
Three Months Ended Six Months Ended
------------------ -----------------
June 30, June 30, June 30, June 30,
2016 2015 2016 2015
-------- -------- -------- --------
Net income (loss) $ (1,388) $ 792 $ 730 $ 2,352
Other comprehensive income (loss):
Unrealized gains (losses) on
investments 662 (822) 2,549 63
Tax provision (benefit) related to
items of other comprehensive income 232 (287) 892 23
-------- -------- -------- --------
Other comprehensive income (loss) --
net of taxes 430 (535) 1,657 40
-------- -------- -------- --------
Comprehensive income (loss) $ (958) $ 257 $ 2,387 $ 2,392
======== ======== ======== ========
FORTINET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Six Months Ended
----------------------
June 30, June 30,
2016 2015
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 730 $ 2,352
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 21,841 13,382
Amortization of investment premiums 2,794 3,881
Stock-based compensation 59,249 40,525
Other non-cash items -- net 1,192 1,891
Changes in operating assets and liabilities:
Accounts receivable -- net 2,022 9,523
Inventory (8,019) (7,917)
Deferred tax assets (27,120) (13,072)
Prepaid expenses and other current assets 2,442 (3,492)
Other assets (2,409) (513)
Accounts payable (130) (8,383)
Accrued liabilities (6,426) (228)
Accrued payroll and compensation 8,679 5,670
Other liabilities (2,858) (1,884)
Deferred revenue 111,082 97,156
Income taxes payable 5,463 10,033
---------- ----------
Net cash provided by operating activities 168,532 148,924
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments (230,855) (229,479)
Sales of investments 7,366 22,472
Maturities of investments 219,131 240,625
Purchases of property and equipment (44,399) (15,688)
Payments made in connection with business
acquisition, net of cash acquired (20,660) -
---------- ----------
Net cash provided by (used in) investing
activities (69,417) 17,930
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 22,972 42,647
Taxes paid related to net share settlement of
equity awards (17,358) (11,362)
Repurchase and retirement of common stock (50,000) -
Payments of debt assumed in connection with
business acquisition (1,626) -
---------- ----------
Net cash provided by (used in) financing
activities (46,012) 31,285
---------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 53,103 198,139
CASH AND CASH EQUIVALENTS -- Beginning of period 543,277 283,254
---------- ----------
CASH AND CASH EQUIVALENTS -- End of period $ 596,380 $ 481,393
========== ==========
Reconciliations of non-GAAP results of operations measures to the nearest
comparable GAAP measures
(Unaudited, in thousands, except per share amounts)
Reconciliation of net cash provided by operating activities to free cash
flow
Three Months Ended
-----------------------
June 30, June 30,
2016 2015
---------- ----------
Net cash provided by operating activities $ 67,941 $ 84,305
Less purchases of property and equipment (14,443) (10,761)
---------- ----------
Free cash flow $ 53,498 $ 73,544
========== ==========
Reconciliation of GAAP operating income or loss to Non-GAAP operating
income, operating margin, net income and diluted net income per share
Three Months Ended June 30, 2016
---------------------------------------
GAAP Non-GAAP
Results Adjustments Results
---------- ------------ ----------
Operating income (loss) $ (4,045) $ 40,016 (a) $ 35,971
========== ============ ==========
Operating margin -1% 12%
========== ==========
Adjustments:
Stock-based compensation 30,347
Impairment of intangible assets -
Amortization of acquired
intangible assets 2,269
ERP-related expenses 6,316
Acquisition-related charges 254
Inventory fair value adjustment
amortization 277
Restructuring charges 553
Tax adjustment (14,653)(c)
-----------
Net income (loss) $ (1,388) $ 25,363 $ 23,975
========== ============ ==========
Diluted net income (loss) per share $ (0.01) $ 0.14
========== ==========
Shares used in diluted net income
(loss) per share calculations 172,075 176,298
========== ==========
(a) To exclude $30.3 million of stock-based compensation, $2.3 million of
amortization of acquired intangible assets, $6.3 million of ERP-related
expenses, $0.3 million of acquisition-related charges, $0.3 million of
inventory fair value adjustment amortization recorded pursuant to our
business acquisition and $0.6 million of restructuring charges in the three
months ended June 30, 2016.
(b) To exclude $21.8 million of stock-based compensation, $1.6 million
impairment of acquired intangible assets, $0.2 million of amortization of
acquired intangible assets, $1.4 million of ERP-related expenses, and $1.3
million in acquisition-related charges in the three months ended June 30,
2015.
(c) Non-GAAP financial information is adjusted to achieve an overall 34%
percent and 35% percent effective tax rate in the three months ended June
30, 2016 and June 30, 2015, respectively, on a non-GAAP basis, which
differs from the GAAP effective tax rate.
Reconciliation of GAAP operating income or loss to Non-GAAP operating
income, operating margin, net income and diluted net income per share
Three Months Ended June 30, 2015
--------------------------------------
GAAP Non-GAAP
Results Adjustments Results
---------- ----------- ----------
Operating income (loss) $ 2,952 $ 26,339 (b) $ 29,291
========== =========== ==========
Operating margin 1% 12%
========== ==========
Adjustments:
Stock-based compensation 21,760
Impairment of intangible assets 1,593
Amortization of acquired
intangible assets 244
ERP-related expenses 1,395
Acquisition-related charges 1,347
Inventory fair value adjustment
amortization -
Restructuring charges -
Tax adjustment (7,745)(c)
----------
Net income (loss) $ 792 $ 18,594 $ 19,386
========== =========== ==========
Diluted net income (loss) per share $ - $ 0.11
========== ==========
Shares used in diluted net income
(loss) per share calculations 176,234 176,234
========== ==========
(a) To exclude $30.3 million of stock-based compensation, $2.3 million of
amortization of acquired intangible assets, $6.3 million of ERP-related
expenses, $0.3 million of acquisition-related charges, $0.3 million of
inventory fair value adjustment amortization recorded pursuant to our
business acquisition and $0.6 million of restructuring charges in the
three months ended June 30, 2016.
(b) To exclude $21.8 million of stock-based compensation, $1.6 million
impairment of acquired intangible assets, $0.2 million of amortization of
acquired intangible assets, $1.4 million of ERP-related expenses, and
$1.3 million in acquisition-related charges in the three months ended
June 30, 2015.
(c) Non-GAAP financial information is adjusted to achieve an overall 34%
percent and 35% percent effective tax rate in the three months ended June
30, 2016 and June 30, 2015, respectively, on a non-GAAP basis, which
differs from the GAAP effective tax rate.
Reconciliation of diluted weighted average shares outstanding used in the
calculation of GAAP and non-GAAP earnings per share
Three Months Ended
-------------------
June 30, June 30,
2016 2015
--------- ---------
Shares used in diluted net loss per share calculations
-- GAAP 172,075 176,234
Adjustment for diluted weighted average shares
outstanding (a) 4,223 -
--------- ---------
Shares used in diluted net income per share
calculations -- Non-GAAP 176,298 176,234
========= =========
(a) GAAP diluted weighted average shares outstanding differs from non-GAAP
diluted weighted average shares outstanding in periods when we have a GAAP
net loss and a non-GAAP net income. The adjustment for diluted weighted
average shares outstanding represents the dilutive effect of employee
equity incentive plan awards and is calculated by applying the treasury
stock method.
Billings Reconciliation
Three Months Ended
-------------------
June 30, June 30,
2016 2015
-------- ---------
Total revenue $311,391 $ 239,785
Add increase in deferred revenue 66,793 57,390
Less deferred revenue balance acquired in business
acquisition (4,400) -
-------- ---------
Total billings $373,784 $ 297,175
======== =========
Investor Contact:
Michelle Spolver
Fortinet, Inc.
408-486-7837
mspolver@fortinet.com
Media Contact:
Sandra Wheatley
Fortinet, Inc.
408-391-9408
swheatley@fortinet.com
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