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Fortinet Execs: Channel Sales Leadership Change Won't Impact Q4 Results

On Fortinet's third-quarter earnings call, top executives respond to last month's sales leadership change, which CRN was first to report included the departure of channel chief Joe Sykora.

Despite a change in channel sales leadership last month, Fortinet's top executives said the company doesn't expect the move to have a major impact on sales in the coming quarter.

"We don't view that as having an impact on the fourth quarter," CFO Andrew Del Matto said when asked about sales management changes on the company's third-quarter earnings call Thursday.

Del Matto said the company doesn't comment on executive changes.

[Related: Sources: Fortinet Channel Chief Sykora Out, Security Vendor Appoints Former Proofpoint Exec Bove To Lead Partner Sales]

Fortinet Vice President of Americas Channels and Enhanced Technologies Joe Sykora left the company last month, a story first reported in CRN. Sykora had been with Fortinet since 2010, holding a variety of marketing and channel sales leadership roles at the Sunnyvale, Calif.-based security vendor and helping grow channels as a percentage of overall sales.

Fortinet replaced Sykora with Jon Bove, who returned to the Fortinet channel team, where he had been regional vice president of U.S. channels, after a brief stint leading North American channels at Proofpoint.

Sales overall were up for Fortinet in the quarter, rising 18 percent year over year to $374.2 million. Billings for the quarter, which ended Sept. 30, were up 24 percent year over year to $431.7 million. Net income for the quarter was $26.6 million, up from $6.3 million in the same quarter last year.

Fortinet CEO Ken Xie said the company continued to see demand grow for its Security Fabric platform, which he said has seen a "rapidly growing installed base of enterprise customers." Non-FortiGate products now account for 25 percent of the company's overall sales and are growing at a faster clip than the traditional FortiGate business, he said. Finally, Xie said cloud security offerings around Microsoft Azure, Amazon Web Services and Google, as well as critical infrastructure and the Internet of Things, present significant growth opportunities for Fortinet going forward.

Despite the demand in the quarter, Fortinet did announce a lower-than-expected guidance for the coming quarter around billings. CFO Del Matto said Fortinet expects billings for the fourth quarter to be between $510 million and $525 million and revenue between $404 million and $412 million. Del Matto said the lower fourth-quarter billings prediction was due to macro issues – such as geopolitical issues in North Asia and recent natural disasters in Central America and the Caribbean – as well as unpredictability around telecom sales.

CEO Xie added that Fortinet is behind on hiring, and that may also impact its forecast. The company is investing in catching up, but that might take six to 12 months to show an impact, according to Xie. When asked why the company was so slow to hire, he said Fortinet was more focused on margin in the first couple of quarters of the year and was now looking to add the new hires.

"We're starting to add hiring capacity, add additional sales capacity. I believe we're doing better going forward," Xie said.

Fortinet also is investing in training its existing sales staff on new sales models around the Security Fabric, which is a multi-product sale, he said. Fortinet already is investing there, according to Xie, but that might also take some time to show an impact.

For the full year, Fortinet expects between $1.77 billion and $1.78 billion in billings and $1.48 billion and $1.49 billion in sales.

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