For over 20 years, Fortinet has been a driving force in the evolution of cybersecurity and the convergence of networking and security. We had a conversation with Ken Xie, Founder, Chairman of the Board, and CEO of Fortinet on his perspective on the company's continued growth, customer momentum, and industry trends following Fortinet's Q2 2023 earnings.

Can you give us an overview of Fortinet's Q2 2023 results?

We continue to see strong growth worldwide. Our total revenue in the second quarter increased 26%. This was partly driven by strong revenue growth in services, which topped 30% for the second consecutive quarter, including 34% growth in security subscriptions. And our non-FortiGate products grew over 45%, nearing a$2 billion annual run rate.

What is contributing to Fortinet's continued business growth?

Fortinet's success lies in our broad, integrated platform, proprietary ASIC security processors, and ability to converge networking and security on-premises and in the cloud using a single FortiOS operating system. We will continue leveraging these advantages to drive future growth. This unique integrated strategy and our growing go-to-market investments have enabled significant growth outside our market-leading network security solutions, including SASE, SD-WAN, OT security, cloud security, and security operations. We are also dedicating additional resources to support the hybrid infrastructure and hybrid work strategies of today's evolving business networks.

Fortinet has also been receiving accolades from top industry analysts. Can you tell us a little bit about these latest results?

Westlands Advisory just named Fortinet as the sole leader in IT/OT Network Protection Platforms in their latest OT Security and Cybersecurity report. According to their findings, we are currently one of the top and fastest-growing OT security vendors in an OT market they expect to grow to$33 billion by 2030.

We also recently announced the results of an independent analysis by Forrester that evaluated the cost savings and business benefits of deploying FortiGate Next-Generation Firewalls and FortiGuard AI-Powered Security Services within the enterprise data center. Their results demonstrated an astonishing 300%+ return on investment over three years, payback in six months, and a 90% reduction in time spent on manual updates.

Similarly, an independent analysis by Enterprise Strategy Group determined that customers who deployed Fortinet Security Operations solutions-such as FortiEDR and FortiNDR-reduced their time to detect and respond to incidents from an average of three weeks to an hour. This latest finding is significant because it demonstrates the substantial impact that artificial intelligence, machine learning, and the integration of Fortinet SecOps Fabric products can have on an organization's ability to secure and maintain its rapidly expanding attack surface against today's increasingly sophisticated attacks.

Can you share more about how Fortinet is leveraging artificial intelligence?

Fortinet has been at the forefront of AI and machine learning innovation for years. We leverage deep learning and artificial neural networks that we have designed, trained, and patented to power our products and security services. This approach extends consistent AI-enhanced services across our portfolio, enabling faster, stronger, and more accurate customer defenses.

One of our first AI-powered use cases was the introduction of the virtual FortiGuard threat analyst. Using advanced machine learning, it can address threats in real time while delivering coordinated protection and generate threat intelligence that automatically updates defensive signatures across the Fabric every time a new threat is identified.

Additionally, our platform ingests and analyzes more than 100 billion events a day and delivers over a billion security updates daily across the Fortinet Security Fabric and ecosystem. And while many of our competitors OEM their security intelligence from different security vendors, our AI-driven FortiGuard Threat Intelligence has been built in-house, allowing us to apply AI consistently across different sources to expand the scope and scale of how and where it can be used.

Can you share more about this past quarter's customer momentum?

IT and OT teams are converging their security and networking solutions. This approach simplifies operations, extends visibility and control, and improves ROI. As a result, we are seeing high interest in our holistic platform approach to security.

A global pharmaceutical leader, for example, just signed an eight-figure deal to adopt Fortinet's cybersecurity Fabric, investing in our OT-aware secure networking architecture and our AIOps and threat intelligence solutions.

We also recently won our largest FortiSASE deal ever from a large bank. They were searching for a single-vendor SASE solution to support their hybrid workforce. They ultimately selected our FortiSASE solution for its 5,000 users because it integrates SD-WAN and SASE into a holistic solution, delivering comprehensive security from the cloud and on-prem while ensuring consistent security policies for all users regardless of their location or the location of the applications they need to access.

These are just two examples of how our platform strategy, integrated operating system, and proprietary ASIC technology resonate with customers and fill a critical gap left behind by vendors who still largely focus on point solutions.

What's significant about Fortinet's new Secure Networking product innovations and SD-WAN services recently announced?

We just announced the new FortiGate 90G, our first next-generation firewall and secure SD-WAN appliance to run the new SP5 security processor ASIC, designed to deliver industry-leading security functions, performance, scalability, and power efficiency at a cost-effective price. The FortiGate 90G is also fully integrated with our FortiGuard AI-Powered Security Services. As a result, it delivers secure compute ratings as much as 16 times greater than the average of our competitors' similarly priced models while using over 90% less power.

We also announced two new SD-WAN services: The new underlay performance monitoring service simplifies operations and enhances the digital experience, and the new Overlay-as-a-Service offering facilitates rapid deployment, eliminates redundancy, and when combined with FortiSASE and secure private access, it also ensures seamless interconnection of locations.

These new SD-WAN services showcase our commitment to delivering advanced services to our installed base for additional growth. They also serve organizations seeking a more holistic and integrated approach to security and networking challenges. We also see our single-vendor SASE solution opening another market by providing natively integrated SASE solutions and services to our sizeable SD-WAN installed base.

Lastly, what are industry trends we can expect to see?

We will increasingly see telecom service providers and cloud providers taking advantage of the huge competitive and cost advantages of offering security services, and Fortinet will continue to work closely with these providers on these offerings.

We'll also see the long-term convergence of networking and security continue to happen, with network security becoming larger than the traditional network by 2030. We feel we have a very unique advantage as a driver of the convergence of networking and security, as seen with our in-house built ASIC, including the recently introduced SP5.