Tue, Apr. 21, 1:35 PM
- Security tech firms are rallying once again (HACK +2.3%) after unified threat management (UTM) hardware leader Fortinet (FTNT +9.6%) beat Q1 estimates on the back of 36% Y/Y billings growth, and provided strong Q2 and full-year sales/billings guidance. At least 8 firms have hiked their Fortinet targets in response to the numbers, which followed a Q1 beat and in-line guidance from firewall vendor Check Point.
- In addition to FireEye, which announced an HP partnership this morning (follows a Check Point partnership), gainers include Palo Alto Networks (PANW +4.8%), CyberArk (CYBR +5.1%), Barracuda Networks (CUDA +5.1%), Qualys (QLYS +4.7%), Imperva (IMPV +2.2%), Proofpoint (PFPT +2.6%), and Zix (ZIXI +3.5%). Proofpoint and Zix report after the close, Barracuda on April 27, Qualys and Imperva on May 5, and CyberArk on May 7.
- "Fortinet is ... benefiting from a favorable security environment and increasing opportunity to sell to organizations that are building a multilayered approach to security," observes William Blair in remarks that also have implications for peers. "U.S. enterprise growth was 70% year-over-year with the company adding a total of 8,000 new customers, suggesting increasing traction." FBR (a long-time security tech bull) sees profit growth (currently pressured by heavy spending) improving as sales/marketing investments pay off.
- On the CC (transcript), CEO Ken Xie asserted Fortinet's ability to offer an integrated security platform covering "internal, data center, perimeter, and endpoint security plus advanced threat protection" was a differentiator. CFO Andrew Del Matto claimed FortiGate UTM/next-gen firewall appliance deals were over Palo Alto, Check Point, Cisco, and Juniper; those companies, of course, might claim wins of their own.
Tue, Apr. 21, 9:22 AM
Mon, Apr. 20, 6:10 PM
- On top of beating Q1 estimates, Fortinet (NASDAQ:FTNT) has guided in its earnings slides (.pdf) for Q2 revenue of $224M-$228M (+23% Y/Y at midpoint) and full-year revenue of $935M-$940M (+22% at midpoint), above consensus estimates of $222.1M and $926.1M.
- With heavy spending weighing on EPS, Q1 and full-year EPS guidance is respectively at $0.08-$0.09 and $0.51-$0.52 vs. consensus estimates of $0.11 and $0.50.
- With strong corporate security IT spending acting as a tailwind, Q1 billings totaled $254.3M, +36% Y/Y (much better than 26% revenue growth) and easily topping guidance of $226M-$230M. Q2 billings guidance is at $263M-$268M (+25% at midpoint), and full-year guidance at $1.105B-$1.12B (+24% at midpoint). Given Fortinet's history, the guidance might prove conservative.
- CEO Ken Xie is in a good mood. "Our first quarter billings growth was the highest since becoming a public company over five years ago ... we grew the number of large deals closed against competitors and added over 8,000 customers to our base of more than 200,000 ... we feel Fortinet's scale is starting to provide more of a competitive differentiator on multiple fronts."
- The billings growth resulted in the UTM hardware leader's deferred revenue balance rising 33% Y/Y to $600.2M. It also yielded free cash flow of $59.7M, well above net income of $13.5M. Operating expenses rose 40% Y/Y to $131.2M (outpaced revenue and billings growth), with sales/marketing spend accounting for $91.3M.
- FTNT +8.6% AH to $37.60, making new highs along the way.
- Q1 results, PR.
Mon, Apr. 20, 5:38 PM
Mon, Apr. 20, 4:21 PM
Mon, Apr. 13, 4:44 PM
- A Q1 Piper survey of security resellers found of 54% of Palo Alto Networks (NYSE:PANW) resellers stating their sales were above plan during the quarter, the highest figure among 10 covered firms. 19% were below plan, and 27% in-line.
- Piper notes Palo Alto's above-plan reading was its highest since Q4 2013, and that it also "had the highest percent of resellers expecting above normal seasonality in Q2 (June) with 60 percent."
- FireEye (NASDAQ:FEYE) had the second-best numbers: 43% of resellers were above plan, 21% below, and 36% in-line. 20% expect Q2 to be above normal seasonality. Barracuda (NYSE:CUDA) was third on Piper's list with 25% above plan, 13% below, and 63% in-line.
- ProofPoint (NASDAQ:PFPT) was a laggard: 56% of resellers were below plan, 44% in-line, and none above. Moreover, the net difference between above-plan and below-plan resellers (-56%) represented a sharp reversal from Q4's +20%. A silver line: 33% of resellers expect above-normal Q2 seasonality.
- Fortinet (NASDAQ:FTNT) was also soft: 13% of resellers were above plan vs. 38% below and 50% in-line. Its net difference fell to -25% from Q4's +6%. Imperva (NYSE:IMPV) had 29% below plan, 71% in-line, and none above; however, its net difference (-29%) was only a little worse than Q4's -20%.
- ProofPoint fell 6.6% today, and Fortinet fell 3.8%. But other security tech plays also sold off. FireEye fell 3.2%, giving back some of the Friday gains seen in anticipation of a 60 Minutes appearance. Symantec (-25% net difference in Piper's survey) fell 5.7% as more details emerged about the company's reported efforts to sell its storage software unit (led shares to spike on Friday).
- Palo Alto fell 1.9%, giving back some of its recent gains. Imperva avoided the selloff, closing down just 0.2%.
- ETF: HACK
Wed, Apr. 1, 2:57 PM
- Several security tech plays are seeing profit-taking on a down day for tech. Palo Alto Networks (PANW -4.3%), FireEye (FEYE -3.4%), Imperva (IMPV -3.5%), Fortinet (FTNT -3.1%), and Proofpoint (PFPT -3%) are the biggest decliners.
- The decline comes as Pres. Obama announces an executive order authorizing "targeted sanctions against individuals or entities whose actions in cyberspace result in significant threats to the national security, foreign policy, economic health or financial stability of the United States."
- Obama, whose administration has already rolled out several executive actions/proposals aimed at helping businesses and government agencies defend against security breaches, goes as far as to call cyberattacks a "national emergency." His latest move comes 3 months after a massive Sony Pictures hack blamed on North Korea.
- ETF: HACK
- Yesterday: Palo Alto expands VMware alliance, launches new service
Thu, Mar. 26, 2:44 PM
- Though the Nasdaq is nearly flat today, many security tech plays are rallying. CyberArk (CYBR +4.6%) is a standout, adding to Monday's post-lockup gains. So are Qualys (QLYS +4.7%), Vasco (VDSI +3.8%), and Proofpoint (PFPT +4.3%). Palo Alto Networks (PANW +1.8%), Fortinet (FTNT +1.9%), and Imperva (IMPV +2.2%) are up more moderately.
- Possibly helping the group: The House Intelligence Committee has unanimously passed a cybersecurity bill that will make it easier for companies to share information about attacks without risking lawsuits. A full House vote could happen by late April, and the Senate is working on a similar bill. The White House recently floated its own cybersecurity initiatives.
- Yesterday, FBR's Daniel Ives (bullish on the space for some time) forecast spending on "next-generation" security solutions will rise 25% this year, up from a prior 20% estimate. He thinks less than 10% of companies have fully invested in next-gen offerings, and sees evidence of a "surge in deal flow with a major upgrade cycle underway in 2015, as enterprises and governments 'fast track' cybersecurity initiatives across the board."
- Ives expects FireEye (FEYE +0.7%), Palo Alto, Fortinet, and Proofpoint to benefit from the trend, which he isn't sqeamish about hyping. "This once-in-a-multi-decade upgrade opportunity is poised to be a rising tide for all security boats ... with legacy security solutions no longer 'good enough' and next-generation products well positioned to replace traditional firewall and endpoint vendors over the coming years."
- ETF: HACK
- Previously: Three cybersecurity companies reportedly planning $1B+ IPOs
Tue, Mar. 10, 2:55 PM
- Security tech plays, several of which were huge gainers in February, have been hard hit (HACK -2.6%) amid a market selloff. Major decliners include FireEye (FEYE -4%), CyberArk (CYBR -6.6%), Proofpoint (PFPT -4.7%), and Vasco (VDSI -5.5%). Imperva is off sharply after announcing a 3M-share offering.
- FBN Shebly Seyrafi reiterated his bullish stance on the group today, forecasting security IT spend will grow 14% this year (up from 2014's 11%). Palo Alto Networks (PANW -0.5%) and Fortinet (FTNT -2.4%) are his favorites due to positive checks, but he also likes other names, mentioning FireEye and Check Point (CHKP -0.2%) in particular. Palo Alto and Check Point are seeing only modest losses.
- Earlier today, Check Point launched Threat Extraction, a malware-protection tool that proactively extracts and reconstructs documents traveling over a network with known safe elements (so as to remove the threat of malware). The product launch, which furthers Check Point's efforts to grow its software exposure, follows the company's purchase of threat-prevention software startup Hyperwise.
Thu, Feb. 5, 11:46 AM
- A major data breach at #2 U.S. health insurer Anthem - it involves a database containing personal info about 80M customers/employees - has put cybersecurity back in the spotlight ... along with the companies providing hardware, software, and services to protect against external attacks.
- FireEye (FEYE +5.6%), whose Mandiant endpoint protection/incident response unit has been hired by Anthem to investigate the breach, is among today's gainers. Mandiant was also hired by Sony following its breach; JPMorgan writes today FireEye/Mandiant has become the "go-to" for probing high-profile attacks.
- Other security tech plays rallying today include CyberArk (CYBR +6.5%), Vasco (VDSI +6.1%), Fortinet (FTNT +2.3%), Proofpoint (PFPT +2.6%), Imperva (IMPV +3%), Qualys (QLYS +2.7%), and Barracuda (CUDA +2.5%). The Nasdaq is up 0.7%.
- ETF: HACK
- Previously: Wilson predicts cybersecurity budgets will "explode" in 2015
- Update (3:40PM): Bloomberg reports investigators probing the Anthem breach are "pursuing evidence that points to Chinese state-sponsored hackers who are stealing personal information from health-care companies for purposes other than pure profit."
Thu, Jan. 29, 12:22 PM
- In addition to beating Q4 revenue estimates (while posting in-line EPS), Fortinet (NASDAQ:FTNT) guided on its CC (transcript, earnings slides) for Q1 revenue of $200M-$205M and full-year revenue of $915M-$925M (+20% Y/Y at the midpoint), above consensus estimates of $199.1M and $877.8M. But EPS guidance is respectively at $0.06 and $0.49-$0.50, below consensus estimates of $0.12 and $0.59.
- GAAP operating expenses rose 40% Y/Y in Q4 to $138.4M ($93.2M on sales/marketing), outpacing revenue growth of 26% and billings growth of 35%, and preventing an EPS beat. CFO Andrew Del Matto states Fortinet's investments are focused on "strengthening our enterprise sales force including key vertical teams as well as increased marketing to improve our lead generation and sales productivity."
- Q4 billings totaled $283M, soundly exceeding guidance of $245M-$250M. Q1 and full-year billings guidance is respectively at $226M-$230M (+22% at the midpoint) and $1.065B-$1.08B (+20%). The deferred revenue balance rose 29% Y/Y in Q4 to $558.8M.
- Strong billings growth led 2014 free cash flow to total $164.4M, more than 2x net income of $80.8M. Fortinet's high-end FortiGate UTM and next-gen firewall appliances (the 1000, 3000, and 5000 series') made up 40% of product billings.
- FireEye (FEYE -2.9%), Imperva (IMPV -2.2%), and CyberArk (CYBR -2.7%) are following Fortinet lower; Imperva reports on Feb. 5, FireEye on Feb. 11, and CyberArk on Feb. 12. FireEye announced a partnership with major European/Latin American carrier Telefonica this morning.
- Check Point has also provided light EPS guidance (to go with strong revenue guidance) due to its aggressive spending plans.
Thu, Jan. 29, 9:12 AM
Dec. 18, 2014, 11:13 AM
- FireEye (FEYE +4.9%), recently hired by Sony to probe its massive hacking incident, is rallying strongly on an up day for equities after Sony cancelled The Interview's release in response to the hack and subsequent threats on movie theater chains.
- Other security tech names are also outperforming: PANW +3.2%. KEYW +3.9%. FTNT +2.6%. PFPT +3.2%. Imperva (IMPV +2.6%) is adding to the Wednesday gains it saw following a Deutsche upgrade.
Oct. 23, 2014, 12:03 PM
- Check Point (CHKP +4.2%) beat Q3 estimates and offered healthy Q4 guidance: Revenue of $395M-$430M and EPS of $0.99-$1.09 vs. a consensus of $410.3M and $1.03.
- Fortinet (FTNT -0.1%) posted a Q3 beat, reported strong billings growth, and issued above-consensus Q4 revenue guidance. EPS guidance was light due to aggressive spending.
- Several security tech peers are outperforming on a day the Nasdaq is up 1.7%. PANW +4.4%. FEYE +4.5%. PFPT +4.9%. QLYS +2.7%. The numbers follow downbeat guidance from IBM, SAP, and VMware, and arguably highlight security's growing share of IT spend.
- Oppenheimer is reiterating an Outperform and $30 target on Fortinet, and notes the company's new billings guidance implies 26% 2014 growth at the midpoint (up from 22%). It thinks the UTM hardware vendor's performance is being driven by strong high-end appliance sales, product refreshes, and the fruits of major sales/marketing investments.
Oct. 22, 2014, 4:18 PM
Oct. 6, 2014, 12:28 PM
- Morgan Stanley's Keith Weiss has downgraded Fortinet (FTNT -3.1%) to Equal-weight, albeit while keeping his $29 target.
- Though admitting the UTM security hardware vendor's big sales/marketing and R&D investments are bearing fruit, Weiss doesn't like the face sales productivity (as measured by the ratio of product billings to sales/marketing spend) has been declining over the last 6 quarters.
- He adds sustaining Fortinet's current billings growth could be challenging in 2015. Fortinet has guided for 22% 2014 billings growth.
- Peers Palo Alto Networks (PANW -2.3%) and FireEye (FEYE -3%), both of whom have also been making big sales investments, are also lower. Palo Alto received a bullish Piper note on Friday, while FireEye was hit by a Northland Securities downgrade.
FTNT vs. ETF Alternatives
Fortinet Inc is provider of network security solutions that are designed to address the fundamental problems of an increasingly bandwidth-intensive network environment and a more sophisticated information technology threat landscape.
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