Partners: Fortinet Growth, IPO Boost Presence In Enterprise Market

Once virtually unknown in the security industry, channel partners say that up and coming unified threat management vendor Fortinet is emerging as a solid enterprise player, boosted by strong growth through its first year as a publicly traded company.

Fortinet on Thursday reported $85 million in revenue at the close of its third quarter, growing 29 percent from $66 million in revenue from the third quarter of 2009. Third quarter income totaled $14 million, compared with $6.4 million in the year-ago period.

The third quarter earnings represent the conclusion of a full year since the company achieved an IPO at the end of 2009 and the third consecutive quarter that the Sunnyvale-based company has achieved double digit growth that has surpassed Wall Street analysts expectations.

Ken Goldman, Fortinet chief financial officer, acknowledged that the company exceeded its guidance for the first three quarters following its IPO in November of 2009. "From a growth point of view, from a profitability point of view, we've already overachieved the long term model," he said.

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In particular, the Sunnyvale, Calif.-based company experienced the biggest gains in its product business, which took a sharp upward spike to $35.9 million, rising 41 percent year over year. The company also experienced solid growth in its services business, which grew 21 percent over the last year to $44.5 million.

Executives Point To UTM Popularity

Executives at Fortinet attribute the strong growth to incremental improvements in the economy as well as the the rising popularity of the UTM device, Fortinet's flagship appliance. The UTM device has done well in the enterprise, in an economic environment that has forced many businesses to do more with smaller budgets and fewer resources.

"It's easier to manage and easier to deploy, especially in the service provider market," said Fortinet CEO Ken Xie said in an interview with CRN. "That's where we see the growth also."

Kendra Krause, Fortinet vice president of channel sales, also pointed to a concerted channel push as a reason for the company's sustained growth, with initiatives that included an expanded sales, SE and specialized vertical sales teams, particularly in the areas of health care.

In addition, Krause said that Fortinet was working on expanding some lead generation tools and implemented a channel marketing team to accelerate the development of the company's marketing and branding strategy. The company is implementing a "trade up and trade in" program that allows partners to get discounts by trading in competing or legacy Fortinet products.

Scott Fuhriman, director of sales and product development for TierPoint, a Spokane, Wash.-based solution provider, said that looking back over the past year, Fortinet's IPO has given the company more credibility with enterprise customers, which are typically more conservative about partnering with smaller technology vendors.

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If anything, enterprise customers are less likely to pigeon-hole Fortinet as solely an SMB-focused company following its IPO, Fuhriman said.

"A lot of enterprises have looked at Fortinet but put them into the SMB market space," Fuhriman said, adding that at one time he'd mention the company's name and enterprise customers would say "who is that?"

"Now it's okay," he said."We definitely have been talking with larger entities. I do think that name recognition is improving in the enterprise space."

In particular, Fuhriman said that Fortinet's IPO allowed TierPoint, a managed service provider, to gain a foothold and expand its service business with enterprise customers. That same enterprise relevance was further boosted with the recent launch of a series of virtual appliances, targeted toward enterprise environments, he said. "It's allowing those enterprise customers to feel comfortable with the services we're providing."