Fortinet Q1 FY12/25 Earnings Review
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A Well Oiled Machine
By Hermit Warrior, aka Richard Iacuelli
Look, we can make this earnings summary short and sweet: Fortinet ($FTNT) delivered the kind of Q1 results expected from a well oiled machine settling into a low to mid-teens annual growth rate (expected to keep up for the foreseeable future) while keeping a lid on expenses and throwing out prodigious amounts of cash. There, that's it. You can skip to the chart now.
For those preferring to get their money's worth, here's the detail: Revenue growth of 14% (13.8% to be precise) came in less than a percentage point above guidance with management guiding to a similar 13% growth rate for Q2. Full year 2025 growth is also expected to be around - yes - 13%, with a similar trajectory expected over the next few years.
Amid the smooth humming, however, it's possible I think to detect a few wobbles that might point to some metal shavings hidden in the machine. We'll explore those later. For now, here are the headlines.
The stand-out story, even as revenue growth flatlines, is the continued improvement in EBITDA and unlevered free cashflow (UFCF) margins, which grew to 38% and 32.7% respectively (up from 31% and 27.8% in Q1 '24), almost exactly matching those of AAPL (also at 38% and 32.7% in the latest quarter) - with UCFC margins within shouting distance of those of MSFT and META (both at around 37%). Net cash grew 90% year on year and now represents more than half of annual revenues.