Growing Demand for Security Products Drives Fortinet



Key business drivers

The huge demand for security products has helped Fortinet (FTNT) maintain strong business growth. Moreover, the launch of new product and services coupled with new contract wins continue to act as strong catalysts for the company’s top-line growth. Furthermore, the company’s cloud service is also adding to growth momentum.

The graph above shows that the company’s total revenue has been in an uptrend for the last five quarters. During the period, Fortinet’s revenues have improved at a CAGR (compound annual growth rate) of 3.5%. In fiscal 4Q17, the total net revenue of the company increased by 15% YoY (year-over-year) to $416.7 million. At the end of fiscal 2018, the revenue came in at nearly $1.5 billion, up 17% YoY.

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Analyst estimates and guidance

As per Yahoo Finance, out of 30 analysts covering the stock, six gave the stock a “strong buy,” and 15 had “buy” recommendations. Seven analysts gave the stock “hold” recommendations, while two gave it “underperform” ratings. The average net revenue estimate from analysts for fiscal 1Q18 is $390.3 million. For the full year, it was $1.7 billion.

The company projects total revenue in fiscal 1Q18 to be in the range of $387 million to $393 million, while in full fiscal 2018, it was between $1.70 billion and $1.72 billion.

In January 2018, other big players in the IT space like Microsoft (MSFT) and International Business Machines (IBM) also reported earnings. The revenue for Microsoft in fiscal 2Q18 rose YoY 11%, while revenue for IBM in fiscal 4Q17 improved 1% YoY on a constant currency (or CC) basis.


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