Yahoo Finance Fortinet’s Fiscal 1Q16 Results Beat Analysts’ Expectations
Why Did Fortinet’s 1Q16 Results Beat Analysts’ Expectations?
Fortinet’s fiscal 1Q16 results exceeded analysts’ expectations
After SAP (SAP), ServiceNow (NOW), and Citrix (CTXS), Fortinet (FTNT)—a provider of network security appliances and security subscription services—announced its fiscal 1Q16 earnings results on April 26, 2016. The company’s revenue and non-GAAP (generally accepted accounting principles) EPS (earnings per share) of $284.6 million and $0.12, respectively, beat analysts’ expectations by $11.14 million and $0.03, respectively.
Fortinet’s revenue of $284.6 million grew 33.7% on a YoY (year-over-year) basis in 1Q16. Its non-GAAP net income grew 49% to $20.1 million in 1Q16. However, Fortinet continues to be in a loss. It reported a net loss of $3.4 million in fiscal 1Q16 on a GAAP basis.
Operating segment’s performance
The above graph shows Fortinet’s revenue mix in 1Q16 and its YoY growth. Fortinet’s subscription revenue of ~$160 million grew faster than its product revenue of $125 million, the subscription revenue grew by 39% on a YoY basis. The product revenue only grew by 28% in 1Q16. Fortinet’s subscription revenue growth is faster than its product revenue. It’s a positive sign because the subscription-based business provides recurring revenues that are stable and predictable. This is why it’s usually preferred.
Investors wanting gain exposure to the cybersecurity space might consider investing in the PureFunds ISE Cyber Security ETF (HACK). HACK invests ~5% of its total holdings in Fortinet.
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