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Fortinet (FTNT) Expects $4B in Revenues Through 2023, Shares Gain 3%
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Fortinet (FTNT - Free Report) stock gained 2.7% on Wednesday after the cybersecurity firm forecast strong growth in revenues and billings through 2023.
During a virtual investor day on Tuesday, the company expected its revenues and billings to reach at least $4 billion and $5 billion, respectively, in 2023. The revenue and billing forecast suggests a strong increase of 54% and 62%, respectively, from that reported in 2020.
In 2020, the company’s total sales grew 20% year over year to $2.59 billion, while billings increased 19% to $3.09 billion.
For margins, Fortinet expects non-GAAP gross margin of 80%, while non-GAAP operating margin is anticipated to be at least 25%. In 2020, while non-GAAP gross improved 140 basis points (bps) to 78%, the operating margin expanded 210 bps to 26.9%.
During its last quarterly results reported on Feb 4, Fortinet had projected 2021 revenues and billings of $3.025-$3.075 billion and $3.56-$3.64 billion, respectively. Non-GAAP gross and operating margins are forecast to be 78-80% and 25-27%, respectively.
What’s Driving Fortinet’s Financial Performance?
Fortinet is a provider of network security appliances and Unified Threat Management (“UTM”) network-security solutions to enterprises, service providers and government entities worldwide.
Fortinet is benefiting from the rising demand for security and networking products amid the coronavirus crisis as a huge global workforce is working remotely now. More people logging into employers' networks means a greater need for security. The trend is spurring the demand for Fortinet’s products.
Fortinet is also gaining from its dominance in the UTM space, which is one of the faster-evolving segments in the network-security space. Moreover, the company is benefiting from the rising cyber-attack risks that are propelling the demand for its FortiMail platform.
Growing Adoption of Secure SD-WAN Bodes Well
The growing adoption of Software-Defined Wide Area Network (SD-WAN) solutions could be a key growth driver for Fortinet over the long run.
The market research firm MarketsandMarkets predicts that the market size for SD-WAN solutions could grow to $8.4 billion by 2025 from $1.9 billion in 2020, indicating a CAGR of 34.5%. Moreover, Gartner (IT - Free Report) predicts that 60% of enterprises would implement SD-WAN features by 2024, up from nearly 20% in 2019.
Additionally, with applications rapidly moving to the cloud and the rise of the remote-working trend, numerous IoT devices are added to the network, positioning the SD-WAN market for tremendous growth. Per 650 Group, as mentioned by Hewlett Packard Enterprise (HPE - Free Report) , the market size for SD-WAN is likely to grow from $2.3 billion in 2020 to $4.9 billion in 2024, witnessing a CAGR of 20.5%.
The spurt of transformation is quickly diminishing the relevance of traditional WAN architectures, prompting enterprises to invest in the SD-WAN technology to secure and scale connections from their network edge to on-premises and cloud-based endpoints at lower costs.
As there are only a few vendors that offer security and SD-WAN solutions, Fortinet is well-positioned to capitalize on the increasing opportunities in the market.
Notably, Fortinet SD-WAN solutions’ contribution to 2020 total billings increased to 11% from nearly zero in 2018. SD-WAN billings reached $355 million in 2020, which almost doubled from the 2019 level. The company stated during the virtual investor day meet that SD-WAN sales will remain strong through 2023.
Fortinet currently carries a Zacks Rank #3 (Hold).
The long-term earnings growth rate for Apple is 11.5%.
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Fortinet (FTNT) Expects $4B in Revenues Through 2023, Shares Gain 3%
Fortinet (FTNT - Free Report) stock gained 2.7% on Wednesday after the cybersecurity firm forecast strong growth in revenues and billings through 2023.
During a virtual investor day on Tuesday, the company expected its revenues and billings to reach at least $4 billion and $5 billion, respectively, in 2023. The revenue and billing forecast suggests a strong increase of 54% and 62%, respectively, from that reported in 2020.
In 2020, the company’s total sales grew 20% year over year to $2.59 billion, while billings increased 19% to $3.09 billion.
For margins, Fortinet expects non-GAAP gross margin of 80%, while non-GAAP operating margin is anticipated to be at least 25%. In 2020, while non-GAAP gross improved 140 basis points (bps) to 78%, the operating margin expanded 210 bps to 26.9%.
Fortinet, Inc. Price
Fortinet, Inc. price | Fortinet, Inc. Quote
During its last quarterly results reported on Feb 4, Fortinet had projected 2021 revenues and billings of $3.025-$3.075 billion and $3.56-$3.64 billion, respectively. Non-GAAP gross and operating margins are forecast to be 78-80% and 25-27%, respectively.
What’s Driving Fortinet’s Financial Performance?
Fortinet is a provider of network security appliances and Unified Threat Management (“UTM”) network-security solutions to enterprises, service providers and government entities worldwide.
Fortinet is benefiting from the rising demand for security and networking products amid the coronavirus crisis as a huge global workforce is working remotely now. More people logging into employers' networks means a greater need for security. The trend is spurring the demand for Fortinet’s products.
Fortinet is also gaining from its dominance in the UTM space, which is one of the faster-evolving segments in the network-security space. Moreover, the company is benefiting from the rising cyber-attack risks that are propelling the demand for its FortiMail platform.
Growing Adoption of Secure SD-WAN Bodes Well
The growing adoption of Software-Defined Wide Area Network (SD-WAN) solutions could be a key growth driver for Fortinet over the long run.
The market research firm MarketsandMarkets predicts that the market size for SD-WAN solutions could grow to $8.4 billion by 2025 from $1.9 billion in 2020, indicating a CAGR of 34.5%. Moreover, Gartner (IT - Free Report) predicts that 60% of enterprises would implement SD-WAN features by 2024, up from nearly 20% in 2019.
Additionally, with applications rapidly moving to the cloud and the rise of the remote-working trend, numerous IoT devices are added to the network, positioning the SD-WAN market for tremendous growth. Per 650 Group, as mentioned by Hewlett Packard Enterprise (HPE - Free Report) , the market size for SD-WAN is likely to grow from $2.3 billion in 2020 to $4.9 billion in 2024, witnessing a CAGR of 20.5%.
The spurt of transformation is quickly diminishing the relevance of traditional WAN architectures, prompting enterprises to invest in the SD-WAN technology to secure and scale connections from their network edge to on-premises and cloud-based endpoints at lower costs.
As there are only a few vendors that offer security and SD-WAN solutions, Fortinet is well-positioned to capitalize on the increasing opportunities in the market.
Notably, Fortinet SD-WAN solutions’ contribution to 2020 total billings increased to 11% from nearly zero in 2018. SD-WAN billings reached $355 million in 2020, which almost doubled from the 2019 level. The company stated during the virtual investor day meet that SD-WAN sales will remain strong through 2023.
Fortinet currently carries a Zacks Rank #3 (Hold).
A better-ranked stock in the broader technology sector is Apple (AAPL - Free Report) , which currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term earnings growth rate for Apple is 11.5%.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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