Fortinet (FTNT) Q4 2023 earnings summary

Executive summary

• FY23 revenue was $5.305B, up 20.1% YoY; billings rose 14.4% to $6.400B, and non-GAAP diluted EPS increased 37% to $1.63.

• Q4 revenue was $1.415B, up 10.3% YoY; billings totaled $1.865B.

Financial highlights

• FY23 service revenue rose 28.1% to $3.378B; product revenue increased 8.2% to $1.927B.

• FY23 GAAP operating income was $1.24B with a 23.4% margin; non-GAAP operating income was $1.507B with a 28.4% margin.

• FY23 GAAP net income was $1.15B and non-GAAP net income was $1.29B; GAAP diluted EPS was $1.46 and non-GAAP diluted EPS was $1.63.

• Q4 service revenue grew 24.8% to $927.0M, while product revenue declined 9.6% to $488.1M.

• Q4 non-GAAP operating income was $453.5M with a 32.0% margin; non-GAAP net income was $392.0M and diluted EPS was $0.51.

Outlook and guidance

• FY24 revenue guidance is $5.715B–$5.815B, with midpoint growth of 8.7%; billings guidance is $6.400B–$6.600B, with midpoint growth of 1.6%.

• FY24 service revenue guidance is $3.920B–$3.970B; non-GAAP gross margin guidance is 76.0%–78.0%.

• FY24 non-GAAP operating margin guidance is 25.5%–27.5%, diluted EPS is $1.65–$1.70, and expected diluted shares are 785M–795M.

• Q1'24 revenue guidance is $1.300B–$1.360B and billings guidance is $1.390B–$1.450B; non-GAAP diluted EPS guidance is $0.37–$0.39.

• FY24 expected cash taxes are $520M and capital expenditures are $370M–$420M; Q1'24 capex guidance is $220M–$250M.