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Fortinet Shares Surge 9% As Q2 Results Top Estimates

Share of Fortinet, Inc. (FTNT) surged nearly nine percent in extended trade on Wednesday after the network security solutions provider reported results for the second quarter that topped analysts' expectations. However, the company reported a profit for the quarter that declined from last year, despite double-digit revenue growth, reflecting significantly lower operating margins.

"Our strong second quarter results highlight that our growth strategy is working and our sales and marketing investments are paying off, especially in the high-end enterprise where we saw significant traction with large deals over $500,000 growing 95 percent year over year," Founder, Chairman and CEO Ken Xie said in a statement.

The Sunnyvale, California-based company reported net income of $6.08 million or $0.04 per share for the second quarter, lower than $8.98 million or $0.05 per share in the prior-year quarter.

Excluding items, adjusted net income for the quarter was $18.58million or $0.11 per share, compared to $17.47 million or $0.10 per share in the year-ago quarter.

On average, 25 analysts polled by Thomson Reuters expected the company to report earnings of $0.10 per share for the quarter. Analysts' estimates typically exclude special items.

Total revenue for the quarter increased 25 percent to $184.1 million from $147.4 million in the same quarter last year, and topped twenty-two Wall Street analysts' consensus estimate of $171.92 million.

The company's deferred revenue as of the end of the second quarter stood at $480.2 million, up 23 percent from last year, and billings grew 33 percent year-over-year to $213 million.

Product revenues for the quarter increased 28 percent to $85 million from a year ago, and services revenues were $99 million, up 22 percent from last year.

Operating margin for the quarter contracted 300 basis points to 6 percent from last year's 9 percent, and adjusted operating margin dropped 100 basis points to 16 percent.

"Our ability to exceed expectations across all operating metrics during Q2 was driven by the combination of superior sales execution, improved marketing, and strong demand for new high-performance enterprise products. With continued focused execution and an exciting portfolio of new products that further strengthen our competitive advantage, we believe Fortinet remains well-positioned for growth and market share gains," Xie added.

FTNT closed Wednesday's regular trading session at $24.03, down $0.28 or 1.15% on a volume of 2.82 million shares. However, the stock surged $2.06 or 8.57% in the extended hours trading.

by RTTNews Staff Writer

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