Fortinet: Conference Call Notes
Key points from FTNT's fourth quarter conference call:
Company issued mixed guidance for Q1, seeing EPS of $0.08 vs. $0.12 CapIQ consensus on revs of $155-$159 mln vs. $155.1 mln consensus. Sees gross margin of 70-71%, but a downtick in operating margin to 12% as the company plans to invest, believing it has under-invested in its growth. Specifically, it plans on ramping its sales force and spending on marketing initiatives such as lead generation, and also plans to spend some on R&D as it launches new products. Management feels the short-term margin trade-off will pay-off in the longer term in terms of overall growth. It does expect operating margins to expand throughout the year.
Management says that the recent high-profile cyber attacks have put cyber security back in the spotlight. This is having a positive impact on its business, saying it is well-positioned to capitalize on market opportunities.
FTNT believes it gained market share in Q4, pointing out that it won several large deals over $1 million. The telco and retail verticals were particularly strong.
On a geographic basis, the Americas region continues to be a stand out. The large enterprise sector was especially strong, and there was a pick up in the service provider area as well. The Americas continue to become a larger percentage of the overall revenue mix.
Product revenues were up 17% in the quarter, the strongest product growth rate of the year. Says there was encouraging interest in its newer high-end next-generation firewall products.
*Shares are up ~5% in after hours trade.