Name: Fortinet Inc. (NASDAQ:FTNT) | Analysis of Revenues
Creator: Stock Analysis on Net

Analysis of Revenues

Revenues as Reported

Revenues as Reported

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Fortinet Inc., income statement, revenues

US$ in thousands

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Product	1,780,500)	1,255,000)	916,400)	788,500)	674,400)
Security subscription	1,427,000)	1,125,000)	918,700)	750,900)	606,100)
Technical support and other	1,209,900)	962,200)	759,300)	616,800)	520,700)
Service	2,636,900)	2,087,200)	1,678,000)	1,367,700)	1,126,800)
Revenue	4,417,400)	3,342,200)	2,594,400)	2,156,200)	1,801,200)

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).

Total revenue exhibits a consistent and accelerating upward trajectory from 2018 through 2022. The total revenue grew from 1,801,200 thousand US dollars to 4,417,400 thousand US dollars, representing a total increase of approximately 145% over the analyzed period. The rate of growth accelerated in the latter years, with the largest year-over-year increase occurring between 2021 and 2022.

Product Revenue Expansion: Product revenue demonstrated the most aggressive growth among all segments. Starting at 674,400 thousand US dollars in 2018, it rose to 1,780,500 thousand US dollars by 2022. A significant surge is observed between 2021 and 2022, where product revenue increased by approximately 41.6%, indicating a strong period of hardware or software license sales.
Service Revenue Performance: Total service revenue grew steadily from 1,126,800 thousand US dollars in 2018 to 2,636,900 thousand US dollars in 2022. This growth was driven by two primary components: security subscriptions and technical support. Security subscription revenue grew by approximately 135% over the period, while technical support and other revenue grew by approximately 132%, showing a balanced growth pattern across the service portfolio.
Revenue Composition and Mix Shift: The revenue mix shifted slightly over the five-year period. In 2018, product revenue accounted for approximately 37.4% of total revenue, while service revenue accounted for 62.6%. By 2022, product revenue's share increased to approximately 40.3%, while service revenue decreased to 59.7%. This indicates that while services remain the dominant revenue stream, product sales have grown at a faster relative pace than services in the most recent fiscal year.
Growth Correlation: A strong positive correlation is observed between the growth of product sales and the subsequent growth in security subscriptions and technical support. As product revenue expanded, service revenue followed a similar upward trend, suggesting a successful model of attaching recurring service contracts to new product deployments.

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