Stock Analysis on Net
Stock Analysis on Net

Fortinet Inc. (NASDAQ:FTNT)

This company has been moved to the archive! The financial data has not been updated since May 8, 2023.

Analysis of Income Taxes

Microsoft Excel

Income Tax Expense (Benefit)

Fortinet Inc., income tax expense (benefit), continuing operations

US$ in thousands

Microsoft Excel
12 months ended: Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Federal 218,500 80,700 38,600 11,000 (12,600)
State 19,100 2,500 8,100 100 2,000
Foreign 18,800 23,300 13,600 11,400 36,900
Current 256,400 106,500 60,300 22,500 26,300
Federal (208,300) (90,200) (8,100) 39,000 (125,500)
State (14,900) (1,100) (800) (6,000) 14,400
Foreign (2,400) (1,100) 1,800 (2,800) 3,500
Deferred (225,600) (92,400) (7,100) 30,200 (107,600)
Provision for (benefit from) income taxes 30,800 14,100 53,200 52,700 (81,300)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Item Description The company
Current Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations. Fortinet Inc. current increased from 2020 to 2021 and from 2021 to 2022.
Deferred Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. Fortinet Inc. deferred decreased from 2020 to 2021 and from 2021 to 2022.
Provision for (benefit from) income taxes Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Fortinet Inc. provision for (benefit from) income taxes decreased from 2020 to 2021 but then slightly increased from 2021 to 2022.

Effective Income Tax Rate (EITR)

Fortinet Inc., effective income tax rate (EITR) reconciliation

Microsoft Excel
Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Statutory federal income tax rate 21.00% 21.00% 21.00% 21.00% 21.00%
Effective income tax rate 3.22% 2.24% 9.82% 13.90% -32.40%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Item Description The company
Effective income tax rate Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Fortinet Inc. effective income tax rate decreased from 2020 to 2021 but then slightly increased from 2021 to 2022.

Components of Deferred Tax Assets and Liabilities

Fortinet Inc., components of deferred tax assets and liabilities

US$ in thousands

Microsoft Excel
Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
General business credit carryforward 95,000 63,500 48,900 73,200 29,500
Deferred revenue 380,100 276,500 216,400 152,100 223,900
Reserves and accruals 90,100 59,500 41,900 30,700 26,600
Net operating loss carryforward 21,200 22,200 23,400 57,900 13,500
Stock-based compensation expense 19,800 18,300 17,500 14,800 16,200
Depreciation and amortization 5,600 17,000 6,300 700 3,300
Capitalized research expenditures 176,700 64,200 16,600 — —
Operating lease liabilities 20,800 13,100 11,600 10,600 —
Deferred tax assets 809,300 534,300 382,600 340,000 313,000
Valuation allowance (100,800) (75,000) (54,900) (43,000) (14,900)
Deferred tax assets, net of valuation allowance 708,500 459,300 327,700 297,000 298,100
Deferred contract costs (117,500) (97,400) (74,000) (59,900) (52,100)
Operating lease ROU assets (20,900) (11,900) (10,800) (9,500) —
Acquired intangibles (8,800) (15,700) (5,700) — —
Deferred tax liabilities (147,200) (125,000) (90,500) (69,400) (52,100)
Net deferred tax assets (liabilities) 561,300 334,300 237,200 227,600 246,000

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Item Description The company
Deferred tax assets Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Fortinet Inc. deferred tax assets increased from 2020 to 2021 and from 2021 to 2022.
Deferred tax assets, net of valuation allowance Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Fortinet Inc. deferred tax assets, net of valuation allowance increased from 2020 to 2021 and from 2021 to 2022.
Net deferred tax assets (liabilities) Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting. Fortinet Inc. net deferred tax assets (liabilities) increased from 2020 to 2021 and from 2021 to 2022.

Deferred Tax Assets and Liabilities, Classification

Fortinet Inc., deferred tax assets and liabilities, classification

US$ in thousands

Microsoft Excel
Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Deferred tax assets 569,400 342,300 245,200 232,600 255,000
Deferred tax liabilities 8,100 8,000 8,000 5,000 9,000

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Item Description The company
Deferred tax assets Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent. Fortinet Inc. deferred tax assets increased from 2020 to 2021 and from 2021 to 2022.
Deferred tax liabilities Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent.

Adjustments to Financial Statements: Removal of Deferred Taxes

Fortinet Inc., adjustments to financial statements

US$ in thousands

Microsoft Excel
Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Adjustment to Total Assets
Total assets (as reported) 6,228,000 5,919,100 4,044,500 3,885,500 3,078,000
Less: Noncurrent deferred tax assets, net 569,400 342,300 245,200 232,600 255,000
Total assets (adjusted) 5,658,600 5,576,800 3,799,300 3,652,900 2,823,000
Adjustment to Total Liabilities
Total liabilities (as reported) 6,509,600 5,120,700 3,188,500 2,563,600 2,067,800
Less: Noncurrent deferred tax liabilities, net 8,100 8,000 8,000 5,000 9,000
Total liabilities (adjusted) 6,501,500 5,112,700 3,180,500 2,558,600 2,058,800
Adjustment to Total Fortinet, Inc. Stockholders’ Equity (deficit)
Total Fortinet, Inc. stockholders’ equity (deficit) (as reported) (281,600) 781,700 856,000 1,321,900 1,010,200
Less: Net deferred tax assets (liabilities) 561,300 334,300 237,200 227,600 246,000
Total Fortinet, Inc. stockholders’ equity (deficit) (adjusted) (842,900) 447,400 618,800 1,094,300 764,200
Adjustment to Net Income Attributable To Fortinet, Inc.
Net income attributable to Fortinet, Inc. (as reported) 857,300 606,800 488,500 326,500 332,200
Add: Deferred income tax expense (benefit) (225,600) (92,400) (7,100) 30,200 (107,600)
Net income attributable to Fortinet, Inc. (adjusted) 631,700 514,400 481,400 356,700 224,600

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Fortinet Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Fortinet Inc., adjusted financial ratios

Microsoft Excel
Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Net Profit Margin
Reported net profit margin 19.41% 18.16% 18.83% 15.14% 18.44%
Adjusted net profit margin 14.30% 15.39% 18.56% 16.54% 12.47%
Total Asset Turnover
Reported total asset turnover 0.71 0.56 0.64 0.55 0.59
Adjusted total asset turnover 0.78 0.60 0.68 0.59 0.64
Financial Leverage
Reported financial leverage — 7.57 4.72 2.94 3.05
Adjusted financial leverage — 12.46 6.14 3.34 3.69
Return on Equity (ROE)
Reported ROE — 77.63% 57.07% 24.70% 32.88%
Adjusted ROE — 114.98% 77.80% 32.60% 29.39%
Return on Assets (ROA)
Reported ROA 13.77% 10.25% 12.08% 8.40% 10.79%
Adjusted ROA 11.16% 9.22% 12.67% 9.76% 7.96%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Financial ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Fortinet Inc. adjusted net profit margin ratio deteriorated from 2020 to 2021 and from 2021 to 2022.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Fortinet Inc. adjusted total asset turnover ratio deteriorated from 2020 to 2021 but then improved from 2021 to 2022 exceeding 2020 level.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Fortinet Inc. adjusted ROA deteriorated from 2020 to 2021 but then improved from 2021 to 2022 not reaching 2020 level.

Fortinet Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

Microsoft Excel
Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Net income attributable to Fortinet, Inc. 857,300 606,800 488,500 326,500 332,200
Revenue 4,417,400 3,342,200 2,594,400 2,156,200 1,801,200
Profitability Ratio
Net profit margin1 19.41% 18.16% 18.83% 15.14% 18.44%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income attributable to Fortinet, Inc. 631,700 514,400 481,400 356,700 224,600
Revenue 4,417,400 3,342,200 2,594,400 2,156,200 1,801,200
Profitability Ratio
Adjusted net profit margin2 14.30% 15.39% 18.56% 16.54% 12.47%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

1 Net profit margin = 100 × Net income attributable to Fortinet, Inc. ÷ Revenue
= 100 × 857,300 ÷ 4,417,400 = 19.41%

2 Adjusted net profit margin = 100 × Adjusted net income attributable to Fortinet, Inc. ÷ Revenue
= 100 × 631,700 ÷ 4,417,400 = 14.30%

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Fortinet Inc. adjusted net profit margin ratio deteriorated from 2020 to 2021 and from 2021 to 2022.

Adjusted Total Asset Turnover

Microsoft Excel
Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Revenue 4,417,400 3,342,200 2,594,400 2,156,200 1,801,200
Total assets 6,228,000 5,919,100 4,044,500 3,885,500 3,078,000
Activity Ratio
Total asset turnover1 0.71 0.56 0.64 0.55 0.59
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Revenue 4,417,400 3,342,200 2,594,400 2,156,200 1,801,200
Adjusted total assets 5,658,600 5,576,800 3,799,300 3,652,900 2,823,000
Activity Ratio
Adjusted total asset turnover2 0.78 0.60 0.68 0.59 0.64

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

1 Total asset turnover = Revenue ÷ Total assets
= 4,417,400 ÷ 6,228,000 = 0.71

2 Adjusted total asset turnover = Revenue ÷ Adjusted total assets
= 4,417,400 ÷ 5,658,600 = 0.78

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Fortinet Inc. adjusted total asset turnover ratio deteriorated from 2020 to 2021 but then improved from 2021 to 2022 exceeding 2020 level.

Adjusted Financial Leverage

Microsoft Excel
Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Total assets 6,228,000 5,919,100 4,044,500 3,885,500 3,078,000
Total Fortinet, Inc. stockholders’ equity (deficit) (281,600) 781,700 856,000 1,321,900 1,010,200
Solvency Ratio
Financial leverage1 — 7.57 4.72 2.94 3.05
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted total assets 5,658,600 5,576,800 3,799,300 3,652,900 2,823,000
Adjusted total Fortinet, Inc. stockholders’ equity (deficit) (842,900) 447,400 618,800 1,094,300 764,200
Solvency Ratio
Adjusted financial leverage2 — 12.46 6.14 3.34 3.69

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

1 Financial leverage = Total assets ÷ Total Fortinet, Inc. stockholders’ equity (deficit)
= 6,228,000 ÷ -281,600 = —

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Fortinet, Inc. stockholders’ equity (deficit)
= 5,658,600 ÷ -842,900 = —

Adjusted Return on Equity (ROE)

Microsoft Excel
Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Net income attributable to Fortinet, Inc. 857,300 606,800 488,500 326,500 332,200
Total Fortinet, Inc. stockholders’ equity (deficit) (281,600) 781,700 856,000 1,321,900 1,010,200
Profitability Ratio
ROE1 — 77.63% 57.07% 24.70% 32.88%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income attributable to Fortinet, Inc. 631,700 514,400 481,400 356,700 224,600
Adjusted total Fortinet, Inc. stockholders’ equity (deficit) (842,900) 447,400 618,800 1,094,300 764,200
Profitability Ratio
Adjusted ROE2 — 114.98% 77.80% 32.60% 29.39%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

1 ROE = 100 × Net income attributable to Fortinet, Inc. ÷ Total Fortinet, Inc. stockholders’ equity (deficit)
= 100 × 857,300 ÷ -281,600 = —

2 Adjusted ROE = 100 × Adjusted net income attributable to Fortinet, Inc. ÷ Adjusted total Fortinet, Inc. stockholders’ equity (deficit)
= 100 × 631,700 ÷ -842,900 = —

Adjusted Return on Assets (ROA)

Microsoft Excel
Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Net income attributable to Fortinet, Inc. 857,300 606,800 488,500 326,500 332,200
Total assets 6,228,000 5,919,100 4,044,500 3,885,500 3,078,000
Profitability Ratio
ROA1 13.77% 10.25% 12.08% 8.40% 10.79%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income attributable to Fortinet, Inc. 631,700 514,400 481,400 356,700 224,600
Adjusted total assets 5,658,600 5,576,800 3,799,300 3,652,900 2,823,000
Profitability Ratio
Adjusted ROA2 11.16% 9.22% 12.67% 9.76% 7.96%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

2022 Calculations

1 ROA = 100 × Net income attributable to Fortinet, Inc. ÷ Total assets
= 100 × 857,300 ÷ 6,228,000 = 13.77%

2 Adjusted ROA = 100 × Adjusted net income attributable to Fortinet, Inc. ÷ Adjusted total assets
= 100 × 631,700 ÷ 5,658,600 = 11.16%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Fortinet Inc. adjusted ROA deteriorated from 2020 to 2021 but then improved from 2021 to 2022 not reaching 2020 level.