Fortinet ($FTNT), unlike many of its rivals, is not a services-only firm that works primarily via a cloud-based platform. Fortinet became a publicly listed business in 2009, and it is still booming 12 years later. As a networking security provider, Fortinet supplies hardware appliances as well as secure chips (known as secure processing units, or SPUs) that integrate into a company's local and distributed networking infrastructure.
And, like many of its more well-known competitors, Fortinet offers zero-trust network access services as well as a variety of cloud-based security solutions. It also runs FortiGuard, a subscription-based security service that delivers threat information, detection, and update services.
In its fiscal first-quarter 2022 results, which were released on May 4, the company's top line went up by 34% from the previous quarter to $955 million, while bookings, a measure of the value of new orders received, went up by over 50% to $1.2 billion.
Over the years, Fortinet has increased its margins whilst maintaining solid growth. This quarter, a gross profit margin of 73% combined with management's usual control of overheads resulted in a substantial net profit margin of over 19%.
Fortinet earned $138 million in net income during the previous three months, while the company created $274 million in free cash flow.
Despite continued expenditures on its manufacturing and data services infrastructure, Fortinet is a free cash flow powerhouse. It generated $1.2 billion in free cash flow over the previous year, almost doubling its net income of $638 million over the same period.
While not cheap, Fortinet's stock is not outrageously overpriced; shares trade at 39.6 times free cash flow, which is an acceptable premium considering the company's rapid sales and cash flow growth.
Investors may profit from its diverse revenue mix of hardware and software, which secures its competitive position in the cybersecurity sector. This year, keep a watch on Fortinet's fixed and variable expenses, as we do with practically every technology firm we cover. Wages in the IT sector are growing, as are component prices for Fortinet's chip and hardware solutions.