Asset structure analysis
Fortinet ’ s total asset in fiscal 2023 was $7.2 billion, an increase of 16%, compared with $6.2 billion in fiscal 2022.
Fortinet ‘s cash and cash equivalents amount to $1.4 billion, accounting for 19.4% of total assets.
The company ‘s short-investment was $1 billion in 2023, consisting of 13.9% of total assets.
Accounts receivable were $1.4 billion in 2023, comprising 19.4% of total assets.
Total current assets were $ 4.4 billion in 2023, which made up 61% of total assets.
Property and equipment was $1 billion in 2023 , accounting for 13.9% of total assets.
Liquidity and solvency analysis
Fortinet ‘s total current liabilities were $3.7 billion in 2023, which included accounts payable($204 million), accrued liabilities($423 million), accrued payroll and compensation($242 million) and deferred revenue($2.8 billion).
The amount of Fortinet ‘s deferred revenue astonished us because a large proportion of deferred revenues often signal a lot of cash flow.
Deferred revenue is not real debt, and fortinet only needs to provide customers with services.
Total current liabilities subtracting deferred revenues of current part were $0.9 billion.
This current ratio was 4.9 times , or current assets covered current liabilities 4.9 times for 2023.
The company ‘s liquidity is extremely sufficient.
Fortinet’ s total liabilities were $7.7 billion in 2023.
Deferred revenue of non-current part was $2.9 billion in 2023.
With subtracting total deferred revenues(current and non-current deferred revenues), the company ‘s debt ratio was 28%.
In addition, net cash provided by operating activities was $1.9 billion ,$1.7 billion and $1.5 billion for 2023, 2022 and 2021.
We could see that true debt ratio was rather low, and the company has great solvency.
Profitability analysis
Fortinet’ s total revenue was $5.3 billion, $4.4 billion and $3.3 billion in 2023, 2022 and 2021, respectively.
the company ‘s total revenue in 2023 was up 20% year-on-year.
Fortinet ‘s total revenue in 2022 was up 33% year-on-year.
The growth rate of total revenues was very fast.
Fortinet’ s net income was $1.1 billion, $0.86 billion and $0.6 billion in 2023, 2022 and 2021, respectively.
The net profit margin was 20.7%, 19.5% and 18% for 2023, 2022 and 2021, respectively.
Fortinent ‘s profitability is very great.
Cash flow analysis
We are glad that fortinet’ s stock-based compensation is very minimal.
Many company has a lot of stock-based compensation expenses, which trigger a decrease in valuation.
Fortinet’ s stock-based compensation was $0.25 billion, $0.22 billion and $0.21 billion in 2023, 2022 and in 2021, respectively.
The rate of stock-based compensation to total revenues was 4.7%, 5% and 6.4% for 2023, 2022 and 2021, respectively.
Fortinet ‘s free cash flow was $1.7 billion, $1.4 billion and $1.2 billion in 2023, 2022 and 2021, respectively.
Fortinet returned shareholders by repurchasing stock.
Repurchases of stock were $1.5 billion, $2 billion and $0.74 billion in 2023, 2022 and 2021, respectively.
Summary
Fortinet ‘s debt ratio is very low, and profitability is rather strong.
Fortinet ‘s free cash flow is strong ,which is used to return to stockholders.
Now, Fortinet’ s stock price is $68.30 per share. We reckon that the reasonable price is under $45.9 per share , which is equivalent to under $35 billion in market capitalization.
Disclaimer: The content is for reference only and does not constitute investment advice.
Introduction
Fortinet is a leader in cybersecurity and the convergence of networking and security. Their mission is to secure people, devices and data everywhere. Their integrated platform, the Fortinet Security Fabric, spans secure networking, unified Secure Access Service Edge (“SASE”) and AI-driven security operations to deliver cybersecurity where our customers need it. As of December 31, 2023, over a half million customers trusted their solutions, including enterprises such as in the financial services, retail and operational technology market verticals, communication and security service providers, government organizations and small and medium-sized businesses. As a global company headquartered in Sunnyvale, California with a large international customer base, the majority of their research and development is in the United States and Canada with a global footprint of support and centers of excellence around the world.