Q&A with Fortinet Executive Leaders on Business and Customer Momentum

Following the Q2 2024 earnings report, below are insights from Fortinet's executive leaders - Ken Xie, Founder, CEO, and Chairman; Keith Jensen, CFO; and John Whittle, COO - to further discuss Fortinet's business focus areas and priorities going forward.

Can you provide an overview of the company's strong Q2 2024 earnings report?

Ken Xie: We are very pleased with our strong execution and record-setting results in the second quarter as we continued to deliver industry-leading solutions to our customers. We continue to invest for growth and, as a result, have gained market share in Secure Networking and the fast-growing Unified SASE and Security Operations markets.

What traction have you seen across Fortinet's three key pillars-Secure Networking, Unified SASE, and AI-driven SecOps?

Ken Xie: The Secure Networking market is expected to surpass traditional networking by 2026. As organizations begin to pivot their investments to a Secure Networking strategy, they are increasingly recognizing that our FortiOS and FortiASIC technologies-the first to truly integrate networking and security-provide 5x to 10x better performance at the same price point than our competitors while increasing security effectiveness and providing a lower total cost of ownership.

We also expect our differentiated Unified SASE offering to become a leader in the SASE market. Our SASE offering provides flexible enforcement, delivering a better user experience while securing access to applications on-premises and in the cloud. We also continue to build our SASE delivery infrastructure, including leveraging our FortiGate technology, to provide a competitive long-term cost advantage.

Our comprehensive AI-driven SecOps portfolio, backed by over a decade of AI innovation and experience, offers the industry's broadest range of sensors and advanced analytics to continuously assess network activity and identify signs of cyberthreats.

FortiAI harnesses Generative AI to turbocharge our platform, helping security operations teams make better-informed decisions and respond to threats faster by simplifying the most complex tasks.

Keith Jensen: Our Unified SASE solution continues to gain market recognition. For the second consecutive year, we have been recognized as a Challenger in the Gartner Magic Quadrant for Single-Vendor SASE, with the third highest placement on the Ability to Execute axis. To date, we have been included in eight Gartner Magic Quadrant reports, many in the Leaders quadrant, which is the most in the industry.

What is contributing to Fortinet's leadership in the cybersecurity market?

Ken Xie: Fortinet has been leading the shift to network and security convergence for over twenty years. We believe we are the only company to have organically built all SASE functions into a single operating system. We have also converged the networking and security stack, including our market-leading SD-WAN, ZTNA, Secure Web Gateway, CASB, Firewall, and many other innovations.

Keith Jensen: Another differentiator for us is how our continued success across all customer segments represents hundreds of thousands of end customers testing and buying Fortinet's security solutions. This is a scale advantage-and responsibility-few others have. It also offers customer validation at a very robust level. We remain committed to maintaining our customers' trust, in part through our responsible radical transparency practices, and we have recently built on this by taking the lead with the U.S. Cybersecurity and Infrastructure Security Agency (CISA) through its Secure by Design Pledge.

John Whittle: Fortinet has always taken a customer-first approach. This includes looking for ways to expand our ability to meet growing customer demands. As part of this commitment, we are focused on broad sales enablement for our workforce while at the same time expanding our ability to protect and serve our customers. This commitment has resulted in success across our SASE and SecOps business areas in particular.

Can you share any highlights of customer wins from this past quarter?

Keith Jensen: Fortinet added over 6,300 logos and secured several major opportunities in Q2, including multiple seven-figure deals.

One notable success involved an international government agency that purchased 12 of our solutions across all three of our core areas, with a special focus on eight of our SecOps solutions. They chose Fortinet for our operating system, which integrates over 30 networking and security functions into a single, unified platform that addresses SecOps, SASE, and Secure Networking. They cited selecting FortiOS for its integrated security, comprehensive visibility, and automated incident response capabilities.

In another significant seven-figure deal, a major utility company expanded our partnership by signing its first Fortinet Enterprise Agreement to protect its OT environment. This deal replaced five legacy vendors and involved deploying ruggedized equipment across their power plants, control centers, and substations. Our proven expertise in securing critical infrastructure and our strong price-performance ratio were pivotal in this expansion.

Additionally, a prominent retail chain secured our FortiSASE solution in a competitive displacement deal that also reached seven figures. They chose Fortinet because our integrated FortiOS platform enabled seamless integration of FortiSASE with their existing Fortinet security solutions.

What do Fortinet's recent acquisition announcements mean for Fortinet's business momentum?

Ken Xie: We are pleased to further expand our SecOps portfolio with the acquisition of Lacework and believe that, together, our solutions form one of the most comprehensive, full-stack cloud security solutions available from a single vendor. Lacework's organically developed AI-driven cloud-native application protection platform will be combined with the power of Fortinet's Security Fabric platform to ensure broad protection across the network, cloud, and endpoint.

This acquisition increases our total addressable market by $10 billion. It also adds a team of talented engineers dedicated to cloud-native security and expands our salesforce, which can sell the entire Fortinet portfolio of solutions.

Acquiring Next DLP, a next-generation, cloud-native SaaS Data Protection platform that extends from endpoint to cloud, will allow us to enter the standalone enterprise DLP market as well as integrated markets with our FortiSASE solution.

John Whittle: We performed extensive due diligence on Next DLP and the tech is excellent. At the same time, integrating with FortiSASE is another step in steadily bolstering our Unified SASE offering, so I am confident in our strategy there. The tech and talent tuck-ins are also very promising. Since most of our tech has been organically developed, the ability to quickly integrate this solution into our existing portfolio was a key consideration.

Across the board, we are seeing excellent progress and execution toward our focus areas of competitive SecOps, Secure Networking, and Unified SASE. This latest acquisition is an important step toward developing the best SASE solution in the industry to protect our customers.

Keith Jensen: Lacework strengthens our position in the high-growth CNAPP market and, as Ken mentioned, expands our total addressable market by $10 billion, while Next DLP improves our position in the standalone enterprise data loss prevention (DLP) market.

What are Fortinet's plans moving forward to keep up this momentum?

Ken Xie: In addition to continuing to focus on our key business pillars, another business priority for Fortinet is securing the growing cyber-physical systems market. To that end, we recently announced several enhancements to Fortinet's OT security platform, which already stands as the market's most comprehensive OT security platform. Enhancements include new ruggedized appliances, advanced secure networking and security operations capabilities, and expanded partnerships with leading OT vendors. We also recently earned the prestigious Red Dot Product Design Award for our FortiGate Rugged 70G with Dual 5G Modems. Fortinet was the only cybersecurity company to receive this recognition for an industrial next-generation firewall. We see OT as a significant growth opportunity and will continue to innovate and commit to excellence in the OT space.

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