Fortinet (FTNT) To Report Q1 Earnings: What's In The Offing?

Fortinet Inc. (NASDAQ:FTNT) is slated to release first-quarter 2019 results on May 2.

It boasts a stellar record of positive surprises. The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 18.77%.

In the last reported quarter, Fortinet's non-GAAP earnings per share of 59 cents exceeded the Zacks Consensus Estimate of 51 cents. Also, the bottom line improved significantly from the year-ago quarter figure of 32 cents.

Revenues of $507 million surpassed the Zacks Consensus Estimate of $496 million, and also increased 22%.

Strong global demand for the company’s Security Fabric offerings due to digital transformation and security refresh cycle across most industries was a driving force behind the previous quarter’s results.

Projections for Q1

For the first quarter, the company expects revenues of $465-$475 million. The Zacks Consensus Estimate is pegged at $471.8 million, indicating an 18.3% rise from the year-ago reported figure.

The company anticipates non-GAAP earnings per share to be in the band of 37-39 cents. The Zacks Consensus Estimate for earnings stands at 38 cents per share, implying a surge of 15.2%.

Non-GAAP gross margin is expected in the range of 75.5% to 76.5%, whereas non-GAAP operating margin is anticipated between 18% and 18.5%.

So, let’s see how things are shaping up prior to this announcement.

Factors at Play

Fortinet’s experience in the security space and mission-critical solutions is helping it maintain and grow its market share in the booming cyber security space. Multiple deal wins and customer additions are likely to aid top-line growth for the first quarter.

Security Fabric architecture contributed to market share gain throughout 2018, along with improved sales and marketing. The trend is expected to have continued in the first quarter.

Strong demand for its portfolio of integrated secured SD-WAN and 5G products is likely to aid the upcoming quarterly results.

Moreover, its security processor unit, SPU, ASIC technology and a new high performance E-series product announced in the last reported quarter, are likely to act as tailwinds.

The Zacks Consensus Estimate for Product revenues is currently pegged at $161 million, indicating a 12.6% increase from the figure reported a year ago. The company’s high-end E-Series appliances are likely to aid its Product growth.

However, stiff competition from key network security players such as Cisco Systems (NASDAQ:CSCO) , Check Point (NASDAQ:CHKP) , Juniper Networks (NYSE:JNPR) and Palo Alto Networks (NYSE:PANW) remains a headwind.

Fortinet currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

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