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Earnings Remain a Concern for Fortinet after 4Q15


Feb. 20 2016, Updated 8:06 p.m. ET

Fortinet’s 4Q15 results in line with analyst expectations

In late January 2016, Fortinet (FTNT), released its 4Q15 and 2015 earnings. Symantec (SYMC), a leading player in this space, has already announced its recent fiscal 3Q16 earnings after the Veritas sale, and FireEye (FEYE) already reported its 4Q15 earnings on February 11, 2016. Now let’s have a look at how Fortinet performed in its most recent fiscal earnings.

Fortinet reported revenues of $296.5 million and non-GAAP (generally accepted accounting principles) EPS (earnings per share) of $0.18 in 4Q15. Fortinet’s 4Q15 revenues of $296.5 million marginally beat analyst expectations by $0.3 million, whereas its EPS was in line with the analyst expectations. Still, despite beating expectations, Fortinet reported a net loss of $2.5 million in 4Q15 on a GAAP basis.

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Fortinet’s 2015 results

For 2015, Fortinet reported revenue and non-GAAP EPS of $1.01 billion, and $0.51, respectively. On a YoY (year-over-year) basis, Fortinet’s 4Q15 and 2015 revenues of $296.5 million and $1.01 billion, respectively, grew by 32% and 31%, respectively.

However, despite this double-digit growth in revenues, 4Q15 marked the first quarter in the past 11 that the company has failed to attain or exceed the high end of guidance.

Operating segment’s performance

The above graph shows Fortinet’s revenue mix in 4Q15 and their YoY growth. Fortinet’s subscription revenue of ~$152 million grew faster than product revenue of $145 million, and subscription revenue grew by 34% on a YoY basis, while product revenue only grew by 30.8% in 4Q15.

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