Fortinet Stock

Fortinet, Inc. (Fortinet) is a leader in cybersecurity and the convergence of networking and security.

The company’s integrated platform, the Fortinet Security Fabric, spans secure networking, unified Secure Access Service Edge (‘SASE’) and AI-driven security operations to deliver cybersecurity where the company’s customers need it.

As of December 31, 2023, over a half million customers trusted the company’s solutions, including enterprises, such as in the financial services, retail and operational technology market verticals, communication and security service providers, government organizations and small and medium-sized businesses. As a global company headquartered in Sunnyvale, California with a large international customer base, the majority of the company’s research and development is in the United States and Canada with a global footprint of support and centers of excellence around the world.

As of December 31, 2023, the company held 957 U.S. patents and 1,299 global patents; and the company is recognized in over 80 enterprise analyst reports demonstrating both the company’s vision and execution across networking and security products.

The company markets and sells its products throughout the world and has established sales offices in many parts of the world. An important part of the company’s growth strategy is to increase sales of the company’s products to large- and medium-sized businesses, service providers and government organizations.

Although the company has a channel sales model, the company’s sales representatives typically engage in direct interaction with end-customers, along with the company’s distributors and resellers, in connection with sales to large- and medium-sized end-customers.

Secure Networking

The company’s Secure Networking solutions focus on the convergence of networking and security via the company’s network firewall and the company’s switches, access points and other secure connectivity solutions. FortiOS is the company’s networking and security operating system that is consistent across the company’s firewalls and secure connectivity solutions and supports over 30 functions that can be delivered via a physical, virtual, cloud or Software as a Service (‘SaaS’) solution. When delivered via the company’s network firewall appliances, functionality is accelerated through the company’s proprietary Application-Specific Integrated Circuits (‘ASIC’) technology. These proprietary ASICs, combined with off-the-shelf central processing units (‘CPUs’) and ASICs, allow the company’s systems to scale, run multiple applications at higher performance, lower power consumption and perform more processor-intensive operations, such as inspecting encrypted traffic, including streaming video. The Network Firewall solution consists of FortiGate data centers, hyperscale and distributed firewalls, as well as encrypted applications (secure sockets layer (‘SSL’) inspection, Virtual Private Network and IPsec connectivity). The company’s ability to converge networking and security also enables the ethernet to become an extension of a company’s security infrastructure through FortiSwitch and FortiLink. The company’s wireless local area network (‘LAN’) solution leverages secure networking to provide secure wireless access for the enterprise LAN edge. FortiExtender secures 5G/LTE and remote ethernet extenders to connect and secure any branch environment. The Secure Connectivity solution includes FortiSwitch Secure Ethernet Switches, FortiAP Wireless Local Area Network Access Points and FortiExtender 5G Connectivity Gateways, among other products.

Unified Secure Access Service Edge (SASE)

As applications move to the cloud and work from anywhere becomes established, cloud delivery is needed to enable secure access to applications on any cloud. The Fortinet Unified SASE solution is a single-vendor SASE solution that includes Firewall, SD-WAN, Secure Web Gateway, Cloud Access Services Broker, Data Loss Prevention, Zero Trust Network Access and cloud security, including Web Application Firewalls, Virtualized Firewalls and Cloud-Native Firewalls, among other products. These functions are delivered through the company’s FortiOS operating systems, which can deploy the full SASE stack through the cloud or on the company’s ASIC-driven appliances. All functions can be managed through a unified management console.

Security Operations (SecOps)

Fortinet’s Security Operations solutions comply with the National Institute of Standards and Technology (‘NIST’) cybersecurity framework of identify, protect, detect, respond and recover, and are delivered as a platform that automates detection and response to accelerate discovery and remediation. The SecOps solution includes FortiAI generative AI assistant, FortiSIEM Security Information and Event Management, FortiSOAR Security Orchestration, Automation and Response, FortiEDR Endpoint Detection and Response, FortiXDR Extended Detection and Response, FortiMDR Managed Detection and Response Service, FortiNDR Network Detection and Response, FortiRecon Digital Risk Protection, FortiDeceptor Deception technology, FortiGuard SoCaaS, FortiSandbox Sandboxing Services and FortiGuard Incident Response Services, among other products.

FortiGuard Labs is the company’s cybersecurity threat intelligence and research organization consisted of experienced threat hunters, researchers, analysts, engineers and data scientists who develop and utilize machine learning and AI technologies to provide timely protection updates and actionable threat intelligence for the benefit of the company’s customers. FortiGuard Security Services are a suite of AI-powered security capabilities that are natively integrated as part of the Fortinet Security Fabric to deliver coordinated detection and enforcement across the entire attack surface. The portfolio consists of FortiGuard application security services, content security services, device security services, NOC/SOC security services and web security services.

FortiCare Technical Support Service is a per-device support service, which provides customers access to experts to ensure efficient and effective operations and maintenance of their Fortinet capabilities. Global technical support is offered 24x7 with flexible add-ons, including enhanced Service Level Agreements (‘SLAs’) and premium hardware replacement through in-country depots. Organizations have the flexibility to procure different levels of service for different devices based on their availability needs. The company offers three per-device support options tailored to the needs of the company’s enterprise customers: FortiCare Premium, FortiCare Elite and FortiCare Essential. The FortiCare Elite service aims to provide 15-minute response times for key product families.

The company also offers training services to its end-customers and channel partners through the company’s training team and authorized training partners. The company has also implemented a training certification program, Network Security Expert (‘NSE’), to help ensure an understanding of the company’s products and services. Since 2020, Fortinet has also offered a number of free online training courses to help address prevalent industry-wide cybersecurity skills gaps and shortages.

Customers

The company’s end-customers are located in over 100 countries and include small, medium and large enterprises and government organizations across a wide range of industries, including financial services, government, manufacturing, retail, technology, education, healthcare and telecommunications. An end-customer deployment may involve as few as one or as many as dozens of different types of integrated products and services from across the company’s broad portfolio that spans secure networking, unified SASE, and security operations. Customers may also access the company’s products via the cloud through certain cloud providers, such as Amazon Web Services, Microsoft Azure and Google Cloud. Often, the company’s customers also purchase the company’s FortiGuard security subscription services and FortiCare technical support services.

Sales and Marketing

The company primarily sells its products and services through a two-tier distribution model. The company sells to distributors that sell to resellers and to service providers and managed security service providers (‘MSSPs’), who, in turn, sell products and/or services to end-customers. In certain cases, the company sells directly to large service providers and major systems integrators. The company works with many technology distributors, including Arrow Electronics, Inc., Exclusive, Ingram Micro and TD Synnex (formerly Tech Data Corporation and Synnex Corporation, separately). In addition, the company provides its cloud-based subscription offerings through Fortinet-owned data centers, as well as data centers operated under co-location arrangements globally, and via public cloud providers.

The company supports its channel partners with a dedicated team of experienced channel account managers, sales professionals and sales engineers who provide business planning, joint marketing strategy, pre-sales and operational sales support. Additionally, the company’s sales teams help drive and support large enterprise and service provider sales through a direct touch model. The company’s sales professionals and engineers typically work closely with the company’s channel partners and directly engage with large end-customers to address their unique security and deployment requirements. To support the company’s broadly dispersed global channel and end-customer base, the company has sales professionals in over 100 countries around the world.

The company’s marketing strategy is focused on building the company’s brand, driving thought leadership with emphasis on the criticality of cybersecurity platform adoption and the convergence of security and networking, as well as driving end-customer demand for the company’s security solutions. The company uses a combination of internal marketing professionals and a network of regional and global channel partners. The company’s internal marketing organization is responsible for messaging, branding, demand generation, product marketing, channel marketing, partner incentives and promotions, event marketing, digital marketing, communications, analyst relations, public relations, and sales enablement. The company focuses its resources on campaigns, programs, and activities that can be leveraged by partners worldwide to extend the company’s marketing reach, such as sales tools and collateral, product awards and technical certifications, media engagement, training, regional seminars and conferences, webinars, and various other demand-generation activities.

Manufacturing and Suppliers

The company’s manufacturing partners include ADLINK Technology, Inc. (‘ADLINK’), IBASE Technology, Inc. (‘IBASE’), Micro-Star International Co. (‘Micro-Star’), Senao Networks, Inc. (‘Senao’), Wistron Corporation (‘Wistron’), and a number of other manufacturers. The company’s proprietary ASICs, which are key to the performance of the company’s appliances, are built by contract manufacturers, including Toshiba America Electronic Components, Inc. (‘Toshiba America’) and Renesas Electronics America, Inc. (‘Renesas’). These contract manufacturers use foundries in Taiwan and Japan operated by either Taiwan Semiconductor Manufacturing Company Limited (‘TSMC’) or by the contract manufacturer itself.

The components included in the company’s products are sourced from various suppliers by the company or, more frequently, by the company’s contract manufacturers. Some of the components important to the company’s business, including certain CPUs from Intel Corporation (‘Intel’) and Advanced Micro Devices, Inc. (‘AMD’); network and wireless chips from Broadcom Inc. (‘Broadcom’), Marvell Technology Group Ltd. (‘Marvell’), Qualcomm Incorporated (‘Qualcomm’); and Intel and memory devices from Intel, Micron Technology (‘Micron’), ADATA Technology Co., Ltd. (‘ADATA’), Toshiba Corporation (‘Toshiba’), Samsung Electronics Co., Ltd. (‘Samsung’), and Western Digital Technologies, Inc. (‘Western Digital’), are available from limited or sole sources of supply.

Intellectual Property

As of December 31, 2023, the company had 1,299 U.S. and foreign-issued patents and 252 pending U.S. and foreign patent applications.

Seasonality

The company’s quarterly results reflect a pattern of increased customer buying at year-end, which has positively impacted billings and product revenue activity in the fourth quarter (year ended December 2023). In the first quarter, the company generally experiences lower sequential customer product buying, followed by an increase in buying in the second and third quarters. On a quarterly basis, the company has usually generated the majority of its product revenue in the final month of each quarter and a significant amount in the last two weeks of each quarter. This is due to customer buying patterns typical in this industry.

The company’s quarterly revenue over the past two years has increased sequentially each quarter within the year.

Competition

Among others, the company’s competitors include Aruba Networks, Inc. (‘Aruba’), Check Point Software Technologies Ltd. (‘Check Point’), Cisco Systems, Inc. (‘Cisco’), CrowdStrike Holdings, Inc. (‘CrowdStrike’), F5 Networks, Inc. (‘F5 Networks’), Huawei Technologies Co., Ltd. (‘Huawei’), Juniper Networks, Inc. (‘Juniper’), Palo Alto Networks, Inc. (‘Palo Alto Networks’), SonicWALL, Inc. (‘SonicWALL’), Sophos Group Plc (‘Sophos’), VMware, Inc. (‘VMware’) and Zscaler, Inc. (‘Zscaler’).

History

Fortinet, Inc. was founded in 2000. The company was incorporated in Delaware in 2000.