Fortinet (FTNT) Prelim. Q3 Results Miss Views

Fortinet (NASDAQ: FTNT) announced preliminary financial results for the third quarter ended September 30, 2016.

Based on preliminary financial information, Fortinet expects total billings1 to be in the range of $343 million to $348 million compared to our previously announced guidance of $372 million to $376 million. Fortinet also expects to report total revenue for the third quarter of 2016 in the range of $311 million to $316 million compared to our previously announced guidance of $319 million to $324 million. Non-GAAP diluted net income1 per share is expected to be $0.15 to $0.16 compared to our previously announced guidance of $0.17 to $0.18. Third quarter 2016 preliminary results are subject to change based on the completion of the Company's quarter-end review process.

(*** The Street sees Q3 revenue of $322.4 million and EPS of $0.18.)

Fortinet's Board of Directors has also authorized a $100 million increase to its existing share repurchase program, bringing the amount authorized under the current program to $300 million. During the third quarter of 2016, the company repurchased $25 million of common stock under its share repurchase program. During 2016, $75 million of common stock has been repurchased under the program, leaving $225 million available for share repurchases as of September 30, 2016.

"Our third quarter results were primarily impacted by the lengthening of deal cycles as enterprises are becoming more strategic with their purchasing decisions and buying with less urgency than last year. We also encountered sales execution challenges in the North America resulting from the newness of our sales organization, as well as macro issues in Latin America and the U.K.," said Ken Xie, founder, chairman and chief executive officer. "Though we are disappointed with our third quarter performance, we continue to feel good about our competitive-differentiating and market-leading security fabric. We remain confident in the underlying strength of our business and long-term growth opportunity, and committed to delivering returns to our shareholders."

1 An explanation of these measures is included below under the heading "Non-GAAP Financial Measures."

Preliminary Results Conference Call Today

Fortinet will host a conference call today, October 11, 2016, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss its preliminary third quarter results. To access this call, dial (877) 303-6913 (domestic) or (224) 357-2188 (international), with conference ID # 96799990. A live webcast of the conference call will be accessible from the Investor Relations page of Fortinet's website at http://investor.fortinet.com and a replay will be archived and accessible at http://investor.fortinet.com/events.cfm. A replay of this conference call can also be accessed through October 18, 2016, by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international), with conference ID # 96799990.

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