Fortinet Q3 FY12/24 Earnings Review

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Going the Distance 

By HermitWarrior

We've made no secret of our view in past earnings notes that the era of legacy hardware-based security vendors is coming to an end. Not tomorrow but eventually, we believe, this category of companies will be deflated by pure software players. Fortinet ($FTNT) at least is determined to prove us wrong for now.

Yes, revenue growth is barely half that of Zscaler ($ZS), our top contender among cloud security stocks, at 13% yoy vs a projected 22% for the coming ZS earnings print. Yes, you still need a box at every location (though they offer virtual firewalls to secure cloud based infrastructure). But this is a skilled operator, with good footwork, a long reach (800K customers) and enough heft in $5.9B of TTM revenues, to give the challengers a good fight. They aim to go the distance.

Plus, let's not forget that FTNT is deemed to be very shareholder friendly, with over $5B in stock buy-backs since 2020 driving a 35% increase in EPS. The share price over the last 12 months shows it.

FTNT vs ZS (FTNT is the blue line) 1 year performance. Source: Yahoo Finance

We now turn to the numbers, valuation, the stock chart and our rating.