Fortinet Q2 Adj Profit Meets View, Revenues Top

(RTTNews) - Network security solutions provider Fortinet, Inc. (FTNT) reported Tuesday a profit for the second quarter that declined from last year, despite double-digit revenue growth, as operating margins significantly declined. However, adjusted earnings per share matched analysts' expectations and quarterly revenues topped their estimates.

"Our ability to meet or exceed billings, revenue and profitability expectations during the second quarter against challenging conditions in some markets and geographies highlights the breadth and diversity of Fortinet's business," Founder, president and CEO Ken Xie said in a statement.

The Sunnyvale, California-based company reported net income of $8.98 million or $0.05 per share for the second quarter, lower than $13.95 million or $0.08 per share in the prior-year quarter.

Excluding items, adjusted net income for the quarter was $17.15 million or $0.10 per share, compared to $19.69 million or $0.12 per share in the year-ago quarter.

On average, 25 analysts polled by Thomson Reuters expected the company to report earnings of $0.10 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenue for the quarter increased 14 percent to $147.43 million from $128.96 million in the same quarter last year, and topped twenty-two Wall Street analysts' consensus estimate of $142.73 million.

The company's deferred revenue as of the end of the second quarter stood at $389.7 million, up 18 percent from the end of the year-ago quarter, and billings grew 10 percent year-over-year to $160.7 million.

Product revenues for the quarter rose 8 percent to $66.5 million from a year ago, and services revenues were $79.7 million, up 22 percent from last year. Operating margin for the quarter contracted 700 basis points to 9 percent from last year's 16 percent, while adjusted operating margins also declined 500 basis points to 17 percent.

"While we will continue to move forward cautiously due to the ongoing macro uncertainty, we feel confident that the combination of our strong competitive advantages and product superiority positions us well for continued growth and market share gains," Xie added.

FTNT closed Tuesday's regular trading session at $20.17, down $0.20 or 0.98% on a volume of 7.68 million shares.