Fortinet Files 10-Q for Q2 2024

TL;DR

**FORTINET 10-Q FILED: Q2 2024 RESULTS & BALANCE SHEET DATA AVAILABLE NOW.**

AI Summary

Fortinet, Inc. filed its 10-Q for the period ending June 30, 2024. The filing details financial performance for the second quarter and first half of 2024, including revenue from products and services. Key financial data and balance sheet information as of March 31, 2024, are also presented.

Why It Matters

This filing provides investors with crucial financial updates for Fortinet, Inc., impacting investment decisions and market perception of the cybersecurity company.

Risk Assessment

Risk Level: medium — As a public company filing a quarterly report, there's inherent risk associated with financial performance and market expectations.

Key Numbers

• 2024 Q2 — Reporting Period (Financials for the second quarter of 2024 are detailed.)
• 2024-06-30 — Fiscal Period End (The report covers financial performance up to this date.)
• 2024-03-31 — Balance Sheet Date (Key balance sheet figures are provided as of this date.)

Key Players & Entities

• Fortinet, Inc. (company) — Filer of the 10-Q
• 20240630 (date) — End of reporting period
• 20240808 (date) — Filing date
• 909 KIFER ROAD, SUNNYVALE, CA 94086 (address) — Company business and mailing address

FAQ

Key Financial Figures

• $0.001 — ange on which registered Common Stock, $0.001 Par Value FTNT The Nasdaq Stock Market

Filing Documents

• ftnt-20240630.htm (10-Q) — 1875KB
• ftnt-ex101amendedandrestat.htm (EX-10.1) — 80KB
• ftnt-ex102amendedandrestat.htm (EX-10.2) — 79KB
• ftnt-ex103amendedandrestat.htm (EX-10.3) — 79KB
• ftnt-ex104amendedandrestat.htm (EX-10.4) — 79KB
• ftnt-ex311_20240630x10q.htm (EX-31.1) — 10KB
• ftnt-ex312_20240630x10q.htm (EX-31.2) — 10KB
• ftnt-ex321_20240630x10q.htm (EX-32.1) — 10KB
• 0001262039-24-000037.txt ( ) — 8929KB
• ftnt-20240630.xsd (EX-101.SCH) — 45KB
• ftnt-20240630_cal.xml (EX-101.CAL) — 71KB
• ftnt-20240630_def.xml (EX-101.DEF) — 266KB
• ftnt-20240630_lab.xml (EX-101.LAB) — 672KB
• ftnt-20240630_pre.xml (EX-101.PRE) — 469KB
• ftnt-20240630_htm.xml (XML) — 1359KB

— FINANCIAL INFORMATION

PART I — FINANCIAL INFORMATION

Financial Statements (unaudited)

Item 1. Financial Statements (unaudited) 3 Condensed Consolidated Balance Sheets as of June 3 0 , 2024 and December 31, 2023 3 Condensed Consolidated Statements of Income for the Three and Six Months Ended June 3 0 , 2024 and 2023 4 Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 3 0 , 2024 and 2023 5 Condensed Consolidated Statements of Stockholders' Equity (Deficit) for the Three and Six Months Ended June 3 0 , 2024 and 2023 6 Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 3 0 , 2024 and 2023 8 Notes to Condensed Consolidated Financial Statements 9

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 26

Quantitative and Qualitative Disclosures about Market Risk

Item 3. Quantitative and Qualitative Disclosures about Market Risk 41

Controls and Procedures

Item 4. Controls and Procedures 41

—OTHER INFORMATION

PART II—OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 42

Risk Factors

Item 1A. Risk Factors 42

Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities 76

Other Information

Item 5. Other Information 76

Exhibits

Item 6. Exhibits 78 Exhibit Index 78

Signatures

Signatures 79 Summary of Risk Factors Our business is subject to numerous risks and uncertainties, including those described in Part II, Item 1A, "Risk Factors" in this Quarterly Report on Form 10-Q. You should carefully consider these risks and uncertainties when investing in our common stock. Some of the principal risks and uncertainties include: Our operating results are likely to vary significantly and be unpredictable. Adverse economic conditions, such as a possible economic downturn or recession, and possible impacts of inflation or stagflation, increasing or decreasing interest rates, changes in government spending or reduced information technology spending, including firewall spending, may adversely impact our business. We have been, and may in the future be, susceptible to supply chain constraints, supply shortages and disruptions, long or less predictable lead times for components and finished goods and supply changes because some of the key components in our products come from limited sources of supply. As a result of supply chain disruptions in previous periods, we increased our purchase order commitments in previous periods and, as a result, may be required to accept or pay for components and finished goods regardless of our level of sales in a particular period, which may negatively impact our operating results and financial condition. Our billings, revenue, and free cash flow growth may slow further or may not continue, and our operating margins may decline. Our real estate assets, including construction, acquisitions, and ongoing maintenance and management of office buildings, warehouses, data centers and points of presence, as well as data center expansions or enhancements, could involve significant risks to our business. Our backlog may fluctuate over quarters. A reduction to backlog increases our aggregate billings and revenue during the quarter when delivered. If we experience supply chain shortages and cannot fulfill orders, o

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION

Financial Statements

ITEM 1. Financial Statements FORTINET, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited, in millions, except per share amounts) June 30, 2024 December 31, 2023 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 2,203.2 $ 1,397.9 Short-term investments 1,114.9 1,021.5 Marketable equity securities 21.2 21.0 Accounts receivable—net 1,083.4 1,402.0 Inventory 383.2 484.8 Prepaid expenses and other current assets 113.4 101.1 Total current assets 4,919.3 4,428.3 PROPERTY AND EQUIPMENT—NET 1,242.7 1,044.4 DEFERRED CONTRACT COSTS 596.9 605.6 DEFERRED TAX ASSETS 998.5 868.8 GOODWILL 127.9 126.5 OTHER INTANGIBLE ASSETS—NET 30.2 35.3 OTHER ASSETS 137.4 150.0 TOTAL ASSETS $ 8,052.9 $ 7,258.9 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES: Accounts payable $ 132.1 $ 204.3 Accrued liabilities 400.6 423.7 Accrued payroll and compensation 217.3 242.3 Deferred revenue 2,975.3 2,848.7 Total current liabilities 3,725.3 3,719.0 DEFERRED REVENUE 2,920.9 2,886.3 LONG-TERM DEBT 993.3 992.3 OTHER LIABILITIES 125.2 124.7 Total liabilities 7,764.7 7,722.3 COMMITMENTS AND CONTINGENCIES (Note 10) STOCKHOLDERS' EQUITY (DEFICIT): Common stock, $ 0.001 par value— 1,500.0 shares authorized; 764.2 and 761.0 shares issued and outstanding on June 30, 2024 and December 31, 2023, respectively 0.8 0.8 Additional paid-in capital 1,499.0 1,416.4 Accumulated other comprehensive loss ( 29.0 ) ( 18.9 ) Accumulated deficit ( 1,182.6 ) ( 1,861.7 ) Total stockholders' equity (deficit) 288.2 ( 463.4 ) TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 8,052.9 $ 7,258.9 See notes to condensed consolidated financial statements. 3 Table of Contents FORTINET, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited, in millions, except per share amounts) Three Months Ended Six Months Ended June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023 REVENUE: Product $ 451.9 $ 472.6 $ 860.8 $ 973.3 Service 982.4 820.2 1,926.8 1,5

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