SOURCE: Fortinet

September 17, 2008 12:00 ET

Fortinet Announces 1H08 Milestones and New Board Member Appointments

Company's Results Propelled by Strong Sales, Market Traction and Business Execution

SUNNYVALE, CA--(Marketwire - September 17, 2008) - Fortinet -- the pioneer and leading provider of Unified Threat Management solutions -- today announced key sales, product, market and operational milestones that contributed to the company's positive results for the first half of 2008, including achieving non-GAAP operating profitability* for the first time in the second quarter of 2008. Additionally, Fortinet announced two recent additions to its Board of Directors -- the appointments of Greg Myers, former vice president of finance and chief financial officer of Symantec Corp., and Hong Lu, chairman of UTStarcom.

Board Appointments

Greg Myers and Hong Lu bring to Fortinet proven track records and numerous decades of combined experience. A seasoned financial executive well-versed in the security business, Greg Myers served as vice president of finance and chief financial officer of Symantec Corp., a provider of Internet security technology, from 1999 to 2005, and held various other senior finance positions at the company from 1993-1999. In addition, Mr. Myers currently serves on the Board of Altera Corp, and has previously served on the Boards of Packeteer Corp. until its sale to Blue Coat Systems; Maxtor Corp. until its sale to Seagate Technology; Inktomi until its sale to Yahoo; and privately held Webroot Corp. Mr. Myers received a B.S. from California State University at Hayward and a MBA from the University of Santa Clara.

An acclaimed telecommunications visionary and entrepreneur, Hong Lu served as president and CEO of UTStarcom, a leading provider of IP-based networking and telecommunications equipment solutions, from 1991-2008, and currently serves as executive chairman of the board. Prior to this, he founded Unitech Telecom, Inc., which later merged with Starcom Networks, Inc. to form UTStarcom. Mr. Lu was also president and CEO of Kyocera Unison, a majority-owned subsidiary of Kyocera International, Inc. from 1983 until its merger with Kyocera in 1986. Additionally, he held CEO and COO roles at Unison World, Inc., a software development company. Mr. Lu received a B.S. in Civil Engineering from the University of California, Berkeley.

Financial Highlights

During 2007, Fortinet achieved $193 million in billings (net amounts invoiced to our customers) and $155 million in revenues for its network security products and services. During the first half of 2008, the company grew billings 32 percent to $120 million and grew revenues 34 percent to $98 million, compared to $73 million the first half of 2007. Sales of its enterprise and high-end security appliances constituted the fastest-growing segments of its business. Additionally, Fortinet grew deferred revenues in the first half of 2008 by 38 percent year over year -- contributing $15 million in cash and ending the period with $105M in total cash and cash equivalents and investments. The company also achieved non-GAAP operating profitability* in 2Q08 and has been cash flow positive each year since 2005. To date, Fortinet has shipped more than 350,000 of its multi-threat security appliances to enterprises and service providers of all sizes around the world.

"The world's largest companies are entrusting their IT security to Fortinet based on the unique value we bring -- a highly flexible, fast and secure platform to address the myriad of data and network security requirements," said Ken Xie, founder, president and CEO of Fortinet. "Increased market recognition, global large customer adoption, and solid business execution are driving Fortinet's growth, which is outpacing the market. Additionally, our strong cash position and revenues -- well-balanced across products and services, geographies and market segments -- provide a solid foundation for continued growth and market opportunities."

Key Enterprise and Service Provider Sales Drives Growth

Fortinet's first half 2008 revenues were driven by notable wins in the telecommunications, managed security service provider, enterprise, government and financial services sectors. Referenceable customer wins during the period included Verizon Communications, Belgacom, Toshiba-Sony Semiconductor, VMware, Cathay United Bank, Chunghwa Telecom and Samsung Tesco. Strengthening its footprint among the world's largest customers, Fortinet also won competitive deals with the following customers:

--  a Global 10 company for PCI compliancy
--  a Global 25 company for a large firewall deployment
--  a Global 50 telecom provider for a data center security project
--  a Global 100 financial company to secure its investment banking
--  a Global 100 mobile operator to secure its internal network
--  a Global 100 company to provide VoIP security and wireless VPNs

In addition, Fortinet closed a number of deals in excess of $1 million during the first half of 2008, including a sale to a Global 30 telecommunications carrier for a managed security services offering, a Global 200 telecommunications carrier, a large Spanish healthcare provider, and the U.S. Federal government.

Business Highlights

Fortinet expanded its business with the successful completion of a technology asset acquisition from IPLocks, a leader in database security and compliance solutions. The acquisition of IPLocks' vulnerability assessment tool, as well as a broad license to IPLocks' database monitoring and auditing tools, extends Fortinet's network security portfolio to the database application level.

The company also maintained its leadership position in the worldwide UTM market for the 10th consecutive quarter, according to analyst firm IDC. Data from the September 2008 IDC Worldwide Quarterly Security Appliance Tracker confirmed Fortinet as the overall leader in UTM factory revenue for first half 2008, ahead of Check Point, Cisco, Juniper and SonicWALL, as well as the leader in worldwide factory revenue and unit shipments in both the high-end ($50K-$99K) and enterprise ($25K-$49.9K) UTM price band segments for the same time period. This data supports Fortinet's growing position among enterprises and service provider customers.

Other Fortinet business highlights during the first half of 2008 include:

--  New Patent Awards: The United States Patent and Trademark Office
    awarded Fortinet four additional patents for network virtualization and
    security related inventions. These new patents strengthen Fortinet's
    growing intellectual property portfolio, bringing the company's total
    awarded patents to 18, with more than 80 patents pending and in process.
--  ISO 9001:2000 Certification: Fortinet was certified for the ISO
    9001:2000 Quality Management Systems standard for its Burnaby and Ottawa,
    Canada locations, which represent key research and development centers for
    the company for activities such as hardware and software design and
    development, the FortiGuard® Network services, technical documentation
    and manufacturing operations.
--  Anti-Spam Certification: Fortinet was among first to receive ICSA Anti-
    spam certification for its FortiMail-4000A secure messaging appliance.
--  FIPS Security Certification: Fortinet's FortiClient™ PC Endpoint
    security software earned the coveted Federal Information Processing
    Standards (FIPS) 140-2 levels 1 and 2 certifications from the National
    Institute of Standards and Technology (NIST).

*non-GAAP operating profitability is defined as GAAP operating loss, after adding back non-cash stock-based compensation

About Fortinet (

Fortinet is the pioneer and leading provider of ASIC-accelerated unified threat management, or UTM, security systems, which are used by enterprises and service providers to increase their security while reducing total operating costs. Fortinet solutions were built from the ground up to integrate multiple levels of security protection -- including firewall, antivirus, intrusion prevention, VPN, spyware prevention and anti-spam -- designed to help customers protect against network and content level threats. Leveraging a custom ASIC and unified interface, Fortinet solutions offer advanced security functionality that scales from remote office to chassis-based solutions with integrated management and reporting. Fortinet solutions have won multiple awards around the world and are the only security products that are certified in six programs by ICSA Labs: Firewall, Antivirus, IPSec VPN, SSL VPN, Network IPS, and Anti-spam. Fortinet is privately held and based in Sunnyvale, California.

Copyright © 2008 Fortinet, Inc. All rights reserved. The symbols ® and ™ denote respectively federally registered trademarks and unregistered trademarks of Fortinet, Inc., its subsidiaries and affiliates, including, but not limited to, the following trademarks: Fortinet, FortiGate, FortiGuard, FortiManager, FortiMail, FortiClient, FortiCare, FortiAnalyzer, FortiReporter, FortiOS, FortiASIC, FortiWiFi, FortiSwitch, FortiVoIP, FortiBIOS, FortiLog, FortiResponse, FortiDB, APSecure, and ABACAS. Other trademarks belong to their respective owners. Statements in this press release concerning future matters such as Fortinet's business outlook, future financial and operating results and overall future prospects are forward-looking statements that involve a number of risks and uncertainties. Actual results could differ materially from those anticipated in those forward-looking statements as a result of certain factors, including general economic conditions, business and economic conditions in the IT security industry, and changes in overall technology spending. All statements made in this press release are made only as of the date set forth at the beginning of this release. Fortinet undertakes no obligation to update the information in this release in the event facts or circumstances subsequently change after the date of this press release.

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