Fortinet recently announced earnings for Q4 and fiscal year 2023, with billings surpassing$6B and over 25,000 new customers last year. We took a moment to sit down with Fortinet leaders Ken Xie, Founder, CEO, and Chairman; Keith Jensen, CFO; and John Whittle, COO, to get some insights into the past year and their views for Fortinet going forward.

Can you give us some insight into the key elements that contributed to the company's strong Q4 and FY23 earnings reports?

Ken Xie: Over the past several months, we have used our expansive portfolio of innovative solutions to address today's evolving markets more actively. Many organizations are converging their networking and cybersecurity tools and strategies. Our integrated secure networking solutions allow them to address rapidly shifting business requirements without waiting for security to catch up, which is often the case when security and networking are deployed as separate processes. And we are still the only vendor to deliver an ASIC-enhanced platform to deliver the networking and security performance today's organizations require.

Fortinet has one of the industry's broadest portfolios of networking and security solutions. Much of our development, including building over 30 critical networking and security solutions into FortiOS, has been in anticipation of the market changes we are seeing now. Three addressable markets have become the foundation of our current strategy: Security Operations (SecOps), Unified Secure Access Service Edge (SASE), and Secure Networking.

John Whittle: Our success in the enterprise marketplace is marked by numerous eight-figure deals this past quarter and underscores the strength of our products and our company vision. The valuable feedback from our diverse customer base, now over 730,000, drives our continuous improvement and instills confidence in both the enterprise and SMB markets. It's a testament to our product quality and a significant achievement among discerning customers.

What traction have you seen in Fortinet's focus areas?

Ken Xie: Today, the total addressable market across SecOps, Unified SASE, and Secure Networking is expected to increase from$150 billion in 2024 to$208 billion by 2027. We are positioned to be the market leader in each of these areas.

Keith Jensen: We saw billings in Q4 grow 8.5%, well above street consensus expectations, driven by improved sales execution and early returns on our SASE and SecOps investments. While the fourth quarter benefited from one mid-eight-figure deal that had pushed from the third quarter and one eight-figure deal that was pulled into from the first quarter of 2024, driving a record six eight-figure transactions in a single quarter, the outperformance in the quarter was also driven by increased demand for our Secure Networking, SASE, and SecOps offering.

Secure Networking was 75% of the billing mix for these exceptionally large transactions. SecOps and SASE combined for another 20% plus, illustrating these companies' long-term commitment to firewall and consolidation strategies.

What do you think sets Fortinet apart?

Keith Jensen: Our Unified SASE, SecOps, and Secure Networking solutions integrate across a single operating system, FortiOS. It's a fundamental characteristic of our platform strategy and one that sets us apart from every other cybersecurity vendor.

Our vision encompasses creating a secure foundation for our customers, allowing them to confidently navigate today's evolving digital landscape while empowering them to embrace innovation without compromising security.

Ken Xie: We are the first vendor to provide a complete and fully integrated single operating system SASE solution to support end-users and applications from end to end, not just from edge to edge. And in Q4, we added 40 new features to our Unified SASE solution, including support for over 150 worldwide POP locations and the ability to protect thin-edge devices. Unified SASE also includes a full networking and security stack consisting of market-leading SD-WAN, ZTNA, SWG, CASB, and Firewall-as-a-Service to support on-premises and cloud environments.

Gartner expects the Secure Networking market to overtake the traditional networking market by 2030. Fortinet is the world's number one network security vendor, representing over half of all global firewall deployments. Our ASIC-powered FortiGate appliances deliver 3x to 10x more performance than competitive solutions. In addition to our physical firewalls, we offer virtual, cloud-native, and Firewall-as-a-Service solutions. And we are also the only vendor to offer a full portfolio of fully integrated wired and wireless LAN technologies-all based on the same FortiOS operating system-that consolidates critical networking and security functions into a single platform. We were also the first vendor to announce business-grade WiFi 7 access points with fully integrated security functionality.

I understand that Fortinet also had some significant customer wins in Q4. Can you tell us more about Fortinet's customer momentum?

Keith Jensen: As mentioned earlier, we saw a record number of large transactions in Q4, each worth over$10 million. One of these deals included mid-seven figures for SecOps and another mid-seven figures for SASE. The SASE solution covers a planned 350,000-user deployment at a top U.S. school district to enable a safe learning environment for students, whether working from the classroom or from home. We won this deal because our operating system integrates over 30 critical networking and security functions across SecOps, Unified SASE, and Secure Networking into a single, unified platform to ensure consistent policies and automated responses.

In another eight-figure deal, a large U.S. enterprise selected us to support their hybrid-cloud architecture as it transitions more of its workloads to the cloud. We could displace a competitive solution because we demonstrated our ability to reduce complexity and total cost of ownership by consolidating security functions into a single FortiOS platform.

And in a third eight-figure win, a large U.S. financial institution expanded our partnership with its first enterprise agreement with Fortinet. This included deploying our recently announced FortiGate Rugged 70G appliance with dual 5G modems to secure thousands of their remote branch and ATM environments. In addition to exceeding their performance expectations compared to other vendors, we successfully demonstrated the versatility of our single operating system and FortiOS platform across multiple use cases.

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

Ken Xie: We will continue prioritizing investments in SASE, SecOps, and Secure Networking and drive Fortinet toward being the number one cybersecurity company. We will also continue to invest heavily in AI across every function and product. Fortinet has used machine learning and AI for over a decade to provide advanced threat intelligence across more than 40 products from network, endpoint, and application security. Our solutions apply AI and ML across the expanded digital attack surface, automatically containing and remediating incidents within seconds, whereas the industry averages for detection and remediations take several days.

We have also been applying generative AI technology across our product line, allowing customers to optimize the security effectiveness and operational efficiency. FortiAI generative AI is already available on FortiSIEM and FortiSOAR, and we will be adding this functionality to more products in the coming months.

View the press release for more information on our Q4 and FY23 results.