Fortinet founder, Chairman and CEO Ken Xie said his company has risen to the top in both SD-WAN and the cloud thanks to its broad offering and deep integrations.
The Sunnyvale, Calif.-based platform security vendor is able to offer comprehensive security, SD-WAN, Wi-Fi access and other network access functions from a single box as part of the FortiOS security fabric, according to Xie. Other vendors looking to deliver the same level of functionality would require customers to use multiple boxes, Xie said.
"They don't have a process completely in place to do any security in there," Xie told Wall Street analysts Thursday. "So that's a huge advantage to the customer [with our offering]."
The benefits of integrating security and network access functions together through SD-WAN are most pronounced in branch offices or other major deployments by service providers, according to Xie. Fortinet is therefore seeing a lot of interest and and trials in the field of its SD-WAN technology, Xie said, as well as significant advantages related to it.
"We do believe we're leading this space," Xie said. "We benefit a lot from this well-integrated and automated approach."
In the cloud arena, Fortinet has enjoyed triple-digit growth in both on-demand cloud consumption as well as bring-your-own-license, according to Fortinet CFO Keith Jensen.
Across Fortinet's cloud partners, Jensen said Amazon Web Services continues to be the leader, with contributions also coming from Microsoft Azure. Oracle, Google and IBM, meanwhile, each came online to Fortinet's ecosystem with initial billing during the first quarter, according to Jensen.
"I'm very, very excited about the cloud opportunity, particularly with them all coming online right now," Jensen said.
Fortinet offers its full fabric in the cloud environment, Xie said, providing not only network security but also the management of endpoints, email and web security, cloud sandboxing and analysis. Only Fortinet provides a full infrastructure fabric approach in the cloud, which Xie said has enabled the company to win some key customers.
"We have the most broad solution," Xie said. "And that's really the fabric approach doing well in the cloud environment."
From a bring-your-own-license standpoint, Jensen said growth has been fueled by five- or six-figure engagements across the major cloud providers, along with a seven-figure cloud engagement from a large enterprise U.S. retailer. Beyond cloud, Xie said Fortinet sees strong growth potential in the Internet of Things and operational technology spaces.
Fortinet's sales for the quarter ended March 31 came in at $399 million, up 17.1 percent from $340.6 million the year prior. That beat Seeking Alpha's projection of $390.4 million.
Net income increased to $41.6 million, or 24 cents per diluted share, up 388.7 percent from $10.7 million, or 6 cents per diluted share, last year. On a non-GAAP basis, net income came in at $57 million, or 33 cents per diluted share, up 183.9 percent from $31 million, or 17 cents per diluted share, the year prior. That crushed Seeking Alpha's projection of 24 cents per share.
Fortinet's stock climbed 54 cents, or 0.96 percent, to $56.11 per share in after-hours trading. Earnings were announced after the market closed Wednesday.
The company's growth was driven by success in its services business, with sales climbing to $256.2 million, up 24.8 percent from $205.3 million the year prior. Fortinet's security and support subscription services revenue includes business from professional services and training. The company's product sales, meanwhile, inched ahead to $142.8 million, up 5.6 percent from $135.3 million the year prior.
From a geographic standpoint, Fortinet's sales in the Americas rose to $176 million, up 20 percent from $146 million the year prior. The Americas accounted for 44 percent of Fortinet's revenue in the quarter, up from 43 percent last year.
In the coming quarter, Fortinet expects to see diluted non-GAAP earnings of between 34 cents and 36 cents per share on revenue in the range of $420 million to $430 million. Analysts surveyed by Zacks had been expecting earnings of 33 cents per share on revenue of $415.3 million.