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Fortinet CEO: enSilo Will Benefit From Our Sales Force, Customer Base

‘They have great technology and they have a great team there, but they need much more investment from the go-to-market side,’ Fortinet CEO Ken Xie says of recently-purchased cybsercurity startup enSilo.

Fortinet CEO Ken Xie said newly-acquired enSilo’s top-notch technology and team will benefit from the platform security giant’s well-oiled go-to-market engine.

enSilo should be able to quickly improve its go-to-market motion by taking advantage of Fortinet’s sales force and customer base, Xie told investors Thursday. The Sunnyvale, Calif.-based security titan announced the purchase of San Francisco-based endpoint security startup enSilo Monday for initial cash consideration of $20 million.

“They have great technology and they have a great team there, but they need much more investment from the go-to-market side,” Xie said.

[Related: Fortinet Buys Cybersecurity Startup enSilo To Boost Endpoint Defenses]

Xie compared the acquisition of 87-person enSilo to Fortinet’s June 2018 purchase of early-stage IoT-focused security firm Bradford Networks for an initial consideration of $17 million. By leveraging Fortinet’s large, substantial go-to-market team, Xie said the company was able to help Bradford’s technology gain traction in the market by rolling it out in September 2018 as the FortiNAC network access control tool.

enSilo made an appealing acquisition target since it’s been working well with Fortinet for quite a while as a Security Fabric partner, according to Xie. The company likes to start its acquisition search by looking at Fortinet Fabric-Ready partners like enSilo since the two sides have already proven they can work well together, Xie said.

Xie said acquiring existing technology alliance partners helps ensure a seamless integration process so that customers aren’t stuck working with a bunch of different point products. Buying enSilo should help Fortinet strengthen its endpoint security muscle by providing the company with real-time automated detection and response capabilities for endpoint and edge data, according to Xie.

“We made the decision because they have a great product and a great team,” Xie said.

But Xie said the enSilo acquisition won’t jeopardize Fortinet’s “long, close” partnership with endpoint security behemoth Symantec. Combining Symantec’s experience around the endpoint and with large enterprise with Fortinet’s expertise in network security and go-to-market strategy continues to be a “win-win” proposition that benefits both parties, according to Xie.

Fortinet’s sales for the quarter ended Sept. 30 soared to $547.5 million, up 20.6 percent from $453.9 million a year earlier. That beat Seeking Alpha’s estimate of $533.5 million.

Net income jumped to $79.8 million, or $0.46 per diluted share, up 35.9 percent from $58.7 million, or $0.33 per diluted share, last year. On a non-GAAP basis, net income skyrocketed to $116.9 million, or $0.67 per diluted share, up 34.8 percent from $86.7 million, or $0.49 per diluted share, the year prior. That crushed Seeking Alpha’s earnings projection of $0.56 per diluted share.

Fortinet’s stock rose $6.56 (8.04 percent) to $88.12 per share in after-hours trading Thursday. That’s the highest the company’s stock has traded since May 2.

The company’s growth was largely driven by success in its services business, with sales climbing to $350.4 million, up 21.1 percent from $289.4 million the year prior. Fortinet’s product sales also jumped to $197.1 million, up 19.8 percent from $164.5 million the year prior.

From a geographic standpoint, Fortinet’s sales in the Americas rose to $241 million, up 24 percent from $194 million the year prior. The Americas accounted for 44 percent of Fortinet’s revenue in the quarter, which is up from 43 percent last year.

In the coming quarter, Fortinet expects to see diluted non-GAAP earnings between $0.69 and $0.71 per share on revenue in the range of $595 million to $610 million. That’s in line with Seeking Alpha projections.

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