Fortinet (FTNT) Q4 Earnings Top, Revenue Growth Rate Dismal
Zacks Investment Research | Feb 05, 2018 09:49PM ET
Continuing with its upbeat performance for the sixth straight quarter, Fortinet Inc. (NASDAQ:FTNT) , yesterday, reported better-than-expected results for fourth-quarter 2017, wherein revenues and earnings came ahead of the company’s expectations, and also surpassed the respective Zacks Consensus Estimate.
Fortinet’s non-GAAP earnings per share of 32 cents beat the Zacks Consensus Estimate of 29 cents. Also, earnings came in higher than management’s guidance range of 28-30 cents and marked an improvement over the year-ago quarter’s earnings of 30 cents, driven mainly by higher revenues which were partially offset by elevated operating expenses.
Quarter in Detail
Fortinet reported fourth-quarter revenues of $416.7 million, beating the Zacks Consensus Estimate of $409 million and up 14.8% year over year. Segment wise, Product revenues increased 2% year over year to $162.1 million, while Services revenues jumped 24.8% to $254.6 million. A large number of deal wins and customer additions during the reported quarter also proved conducive to top-line growth.
During the fourth quarter, the company witnessed 21% year-over-year growth in the number of deals worth more than $100,000, while the number of deals worth more than $250,000 and $500,000 climbed 31% and 24%, respectively.
Billings were up 15% on a year-over-year basis to $534 million.
Non-GAAP (excluding stock-based compensation and amortization of intangible assets) gross profit jumped 14.4% from the year-ago quarter to $313.9 million. However, gross margin contracted 40 basis points (bps) to 75.3%. It also came in below the mid-point of management’s expectation of 75-76% (mid-point 75.5%).
Furthermore, non-GAAP operating expenses jumped 21.6% year over year to $235.3 million. As a percentage of revenues, non-GAAP operating expenses advanced 320 bps year over year to 56.5%.
Non-GAAP operating profit declined 3% to $78.7 million from approximately $81.1 million recorded in the year-ago quarter. Non-GAAP operating profit margin contracted 350 bps to 18.9%, mainly due to lower gross margin and escalating operating expenses as a percentage of revenues which more than offset the benefit of higher revenues. Operating margin, however, came at the higher-end of the company’s guidance range of 18-19%.
Fortinet, Inc. Price, Consensus and EPS Surprise
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