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Press Release: Fortinet Reports Fourth Quarter -5-

· 02/04/2021 16:12
Investor Contact: Media Contact: Peter Salkowski Sandra Wheatley Fortinet, Inc. Fortinet, Inc. 408-331-4595 408-391-9408 psalkowski@fortinet.com swheatley@fortinet.comThree Months Ended Year Ended ---------------------- December December December December 31, 2020 31, 2019 31, 2020 31, 2019 ---------- ---------- --------- ----------- Total revenue $ 748.0 $ 618.1 $2,594.4 $2,163.0 Add: Change in deferred revenue 213.3 186.6 496.2 442.3 Less: Deferred revenue balance acquired in business acquisitions (0.4) (2.4) (0.6) (2.4) --------- --------- -------- -------- Total billings $ 960.9 $ 802.3 $3,090.0 $2,602.9 ===== ===== ======= =======Year Ended December 31, 2020 Year Ended December 31, 2019 -------------------------------------------- -------------------------------------------- GAAP Non-GAAP GAAP Non-GAAP Results Adjustments Results Results Adjustments Results ---------- --------------- ---------- ---------- --------------- ---------- Operating income $531.8 $ 166.2 (a) $698.0 $351.0 $ 185.0 (b) $536.0 ===== ====== === ===== ===== ====== === ===== Operating margin 20.5% 26.9% 16.2% 24.8% ====== ====== ====== ====== Adjustments: Stock-based compensation 193.8 174.1 Amortization of acquired intangible assets 13.3 10.9 Gain on intellectual property matter (40.2) -- Litigation-related matter (0.7) -- Loss on investments in privately-held companies 4.3 (c) 3.8 (d) Tax adjustment (96.4) (e) (83.8) (e) ---------- ---------- Net income $488.5 $ 74.1 $562.6 $331.7 $ 105.0 $436.7 ===== ====== === ===== ===== ====== === ===== Diluted net income per share $ 2.91 $ 3.35 $ 1.90 $ 2.50 ===== ===== ===== ===== Shares used in diluted net income per share calculations 167.7 167.7 175.0 175.0 ====== ====== ====== ======Three Months Ended December 31, 2020 Three Months Ended December 31, 2019 --------------------------------------------- --------------------------------------------- GAAP Non-GAAP GAAP Non-GAAP Results Adjustments Results Results Adjustments Results ----------- --------------- ---------- ----------- --------------- ---------- Operating income $169.4 $ 50.5 (a) $219.9 $122.1 $ 46.5 (b) $168.6 ===== === ===== ==== ===== ===== === ===== ==== ===== Operating margin 22.6% 29.4% 19.8% 27.3% ====== ====== ====== ====== Adjustments: Stock-based compensation 48.9 43.7 Amortization of acquired intangible assets 2.8 2.8 Gain on intellectual property matter (1.2) -- Tax adjustment (21.7) (c) (29.6) (c) --------- --- --------- --- Net income $146.7 $ 28.8 $175.5 $118.2 $ 16.9 $135.1 ===== === ===== ==== ===== ===== === ===== ==== ===== Diluted net income per share $ 0.89 $ 1.06 $ 0.67 $ 0.77 ===== === ===== ===== === ===== Shares used in diluted net income per share calculations 165.5 165.5 175.2 175.2 ====== === ====== ====== === ======Three Months Ended Year Ended December December December December 31, 2020 31, 2019 31, 2020 31, 2019 ---------- ---------- ---------- ---------- Net cash provided by operating activities $ 296.5 $ 190.4 $ 1,083.7 $ 808.0 Less: Purchases of property and equipment (32.3) (47.2) (125.9) (92.2) Less: Proceeds from intellectual property matter -- -- (50.0) -- --------- --------- --------- ------- Free cash flow $ 264.2 $ 143.2 $ 907.8 $ 715.8 ===== ===== ======== ====== Net cash used in investing activities $ (65.0) $ (99.6) $ (72.8) $(502.3) ===== ===== ======== ====== Net cash used in financing activities $ (52.0) $ (43.8) $(1,171.6) $(195.6) ===== ===== ======== ======

(1) Fortinet identified an immaterial error related to the commencement of revenue recognition for certain FortiCare support service contracts, which resulted in an immaterial correction to revenue for prior year reported amounts for the six months ended June 30, 2020. All financial information contained herein has been revised to reflect the correction of this error.

Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures

(Unaudited, in millions, except per share amounts)

Reconciliation of net cash provided by operating activities to free cash flow(1)

Reconciliation of GAAP operating income to non-GAAP operating income, operating margin, net income and diluted net income per share(1)

(a) To exclude $48.9 million of stock-based compensation and $2.8 million of amortization of acquired intangible assets, offset by a $1.2 million gain on intellectual property matter, in the three months ended December 31, 2020.

(b) To exclude $43.7 million of stock-based compensation and $2.8 million of amortization of acquired intangible assets in the three months ended December 31, 2019.

(c) Non-GAAP financial information is adjusted to an overall effective tax rate of 21% and 24% in 2020 and 2019, on a non-GAAP basis, which differs from the GAAP effective tax rate.

(a) To exclude $193.8 million of stock-based compensation and $13.3 million of amortization of acquired intangible assets, offset by a $40.2 million gain on intellectual property matter and a $0.7 million adjustment for a litigation-related matter in 2020.

(b) To exclude $174.1 million of stock-based compensation and $10.9 million of amortization of acquired intangible assets in 2019.

(c) To exclude a $4.3 million impairment charge on an investment in a privately held company in 2020.

(d) To exclude a $3.8 million impairment charge on an investment in a privately held company in 2019.

(e) Non-GAAP financial information is adjusted to an overall effective tax rate of 21% and 24% in 2020 and 2019, on a non-GAAP basis, which differs from the GAAP effective tax rate.

Reconciliation of total revenue to total billings(1)

(1) Fortinet identified an immaterial error related to the commencement of revenue recognition for certain FortiCare support service contracts, which resulted in an immaterial correction to revenue for prior year reported amounts for the six months ended June 30, 2020. All financial information contained herein has been revised to reflect the correction of this error.

(END) Dow Jones Newswires

February 04, 2021 16:12 ET (21:12 GMT)