Fortinet's Sales Restructuring, New Products Drive Double-Digit Sales Growth For Security Vendor
Security vendor Fortinet has made some big changes in its sales structure and product lineup over the past quarter, and CEO Ken Xie said those investments are starting to pay off in the form of double-digit sales growth in the company's first quarter earnings.
In January, Fortinet said it planned to restructure its entire sales force into a globally integrated business unit, broken down into two groups focused on large global strategic accounts and regional territories. In the process, Fortinet redistributed the members of its U.S. Enterprises team and eliminated the group.
More recently, the Sunnyvale, Calif.-based vendor rolled out a new architecture called the Security Fabric, which is an integrated architecture offering designed to unite the company's security solutions from the device to the data center. The Security Fabric also is meant to integrate third-party APIs, help drive visibility and threat intelligence, and ease security management.
These two factors, combined with growing interest in Fortinet's Internal Segmentation Firewall offering, helped drive a "strong start to the year," Xie said on the company's earnings call. Fortinet reported revenue of $284.6 million, up 34 percent year over year. Billings grew 30 percent year, to $330.5 million. Net loss for the quarter, which ended March 31, was $3.4 million, compared with a net income of $1.6 million in the same quarter last year.
"Fortinet has a strong technology advantage and a visionary road map in place to help us continue to grow our market position and address a huge opportunity," Xie said on the call. "We are seeing this play out in the market now and we are well-positioned to continue to grow and take market share from competitors."
For partners, these advancements are key as customers look to consolidate more of their security offerings under fewer providers, CFO Andrew Del Matto said in an interview with CRN after the earnings call. Del Matto said this type of technology will prove key for partners looking to position themselves for the next iteration of the security market, as well as drive additional revenue by selling more across the Fortinet portfolio.
"It gives partners and customers some comfort around where the puck is going ,and there is an architecture that can provide security and scalability for the new world," Del Matto told CRN.
Fortinet is also starting to see a return on investment from its increased push into sales and marketing, Del Matto said. On the earnings call, Del Matto said the company is searching for a replacement for CMO Holly Rollo, who left the company in March to take a position at RSA. He said the company remains committed to escalating its marketing strategy in the meantime, after tripling its investment in the area over the past three years.
"We're certainly committed to our strategy and executing well against that. … The current team in place has been executing well," Del Matto told CRN.
As a result, Del Matto said, Fortinet has not added a significant amount of new partners in the past quarter, choosing instead to invest more heavily in its current partner base. Those investments include lead generation, marketing, user events, training, channel activities and more, he said.
"I think the focus for us from a strategic perspective has been driving more business with our [current] partners. … It's really about empowering our partners through better marketing, better awareness, lead generation and events to help them sell more," Del Matto said.
Fortinet said it expects its second quarter revenues to be between $301 million and $306 million, up 37 percent year over year at the midpoint, and its billings to be between $365 million and $370 million, up 24 percent year over year at the midpoint. The company expects earnings per share for the quarter to be 14 cents.
Fortinet raised its guidance for the full year, citing overperformance in the first quarter and greater anticipated market opportunity. It now expects billings for the full fiscal year to be between $1.52 billion and $1.53 billion, up 30 percent year over year, and sales to be between $1.26 billion and $1.27 billion, up 26 percent year over year.