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Fortinet reports total revenue of $615.5 million

Fortinet total revenue reached $615.5 million, up 18% year over year, according to the company's financial results for the second quarter ended June 30, 2020.

“Strong demand for secure SD-WAN and work-from-home capabilities helped power 18% second quarter revenue growth. Secure SD-WAN billings were approximately 12% of second quarter billings, making this the first time in which SD-WAN represented over 10% of quarterly billings,” says Ken Xie, founder, chairman and chief executive officer. at Fortinet.

“With the network edge stretched across the entire digital infrastructure, we believe networking and security will continue to converge. Recent Secure Access Service Edge, or SASE, market momentum further validates our security-driven networking approach. Our OPAQ Networks acquisition means Fortinet will have one of the most comprehensive SASE platforms," he says.

Product revenue was $211.9 million for the second quarter of 2020, an increase of 11.6% compared to $189.9 million for the same quarter of 2019. 

Service revenue was $403.6 million for the second quarter of 2020, an increase of 21.6% compared to $331.8 million for the same quarter of 2019. 

Billings were $711.5 million for the second quarter of 2020, an increase of 14.3% compared to $622.4 million for the same quarter of 2019. Total deferred revenue was $2.32 billion as of June 30, 2020, an increase of 24.4% compared to $1.87 billion as of June 30, 2019. 

GAAP operating income was $116.7 million for the second quarter of 2020, representing a GAAP operating margin of 19%. GAAP operating income was $75.2 million for the same quarter of 2019, representing a GAAP operating margin of 14.4%. 

Non-GAAP operating income was $168.2 million for the second quarter of 2020, representing a non-GAAP operating margin of 27.3%. Non-GAAP operating income was $123.1 million for the second quarter of 2019, representing a non-GAAP operating margin of 23.6%.

GAAP net income was $112.1 million for the second quarter of 2020, compared to GAAP net income of $72.7 million for the same quarter of 2019. GAAP diluted net income per share was $0.68 for the second quarter of 2020, based on 165.4 million diluted weighted-average shares outstanding, compared to GAAP diluted net income per share of $0.42 for the same quarter of 2019, based on 175.1 million diluted weighted-average shares outstanding. 

Non-GAAP net income was $135.1 million for the second quarter of 2020, compared to non-GAAP net income of $101.6 million for the same quarter of 2019. Non-GAAP diluted net income per share was $0.82 for the second quarter of 2020, based on 165.4 million diluted weighted-average shares outstanding, compared to $0.58 for the same quarter of 2019, based on 175.1 million diluted weighted-average shares outstanding. 

In the second quarter of 2020, cash flow from operations was $247.0 million compared to $195.1 million in the same quarter of 2019. Free cash flow was $216.1 million during the second quarter of 2020, compared to $177.8 million for the same quarter of 2019. 

In the second quarter of 2020, cash paid for share repurchases was $156.1 million compared to $33.8 million in the same quarter of 2019. In July 2020, Fortinet’s board of directors has authorised the increase of $500.0 million to $3.0 billion of our outstanding common stock and extended the share repurchase program through February 28, 2022. As of August 6, 2020, $1.05 billion remained available for future share repurchase.

For the third quarter of 2020, Fortinet says it expects revenue in the range of $630 million to $645 million, and billings in the range of $705 million to $730 million.

Non-GAAP gross margin in the range of 78.% to 79.0%, non-GAAP operating margin in the range of 25.5% to 26.5%.

Diluted non-GAAP net income per share in the range of $0.76 to $0.78, assuming a non-GAAP effective tax rate of 22 per cent. This assumes a diluted share count of 168 million to 170 million.