Fortinet, Inc. (NASDAQ:FTNT) Q2 2020 Earnings Conference Call - Final Transcript

Aug 06, 2020 • 04:30 pm ET

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Fortinet, Inc. (NASDAQ:FTNT) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Fortinet Second Quarter Earnings Announcement Conference Call. [Operator Instructions]After the speakers' presentation there will be a question-and-answer session. [Operator Instructions]

I would now like to hand the conference over to your speaker today. Peter Salkowski. Thank you, and please go ahead, sir.

Executive
Peter Salkowski

Thank you, Chris. Good afternoon, everyone. This is Peter Salkowski, Vice President of Investor Relations at Fortinet. And I am pleased to welcome everyone to our call to discuss Fortinet's financial results for the second quarter of 2020. Speakers on today's call are Ken Xie, Fortinet's Founder, Chairman, and CEO; and Keith Jensen, our Chief Financial Officer. This is a live call that will be available for replay via webcast on our Investor Relations website. Ken will begin our call today by providing a high-level perspective on our business. Keith will then review our financial and operating results for the second quarter, provide some additional details regarding our second quarter performance and some insights into how July performed, before providing guidance for the third quarter of 2020. We'll then open the call for questions. During the Q&A session, we ask that you please keep your questions brief and limit yourself to one question and one follow-up question to allow others to participate.

Before we begin, I'd like to remind everyone that on today's call, we will be making forward-looking statements and these forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those projected. Please refer to our SEC filings, in particular, the risk factors in our most recent Form 10-K and Form 10-Q for more information. All forward-looking statements reflect our opinions only as of the date of this presentation, and we undertake no obligation and specifically disclaim any obligation to update forward-looking statements. Also, all references to financial metrics that we make on today's call are non-GAAP unless stated otherwise. Our GAAP results and GAAP to non-GAAP reconciliations is located in our earnings press release and in the presentation that accompanies today's remarks, both of which are posted on our Investor Relations website. Lastly, all references to growth are on a year-over-year basis unless noted otherwise.

I will now turn the call over to Ken.

Executive
Ken Xie

Thank you, Peter and thank you to everyone for joining today's call to review our second quarter 2020 result. We are very pleased with the solid second quarter performance. Revenue increased 18% to $616 million, with product revenue up 12% and service revenue up 22%. Secure SD-WAN climbed to 12% of total second quarter billings, the first time it's been over 10%. In today's environment, enterprise are focused on effectively and cost efficiently deploy and security across their physical and digital network. To meet these challenges, Fortinet was founded on the vision of bringing security and networking together in what we refer to as security-driven networking. Gartner supports a similar concept, which they call Secure Access Service Edge or SASE. Fortinet is