Income Statement

The income statement presents information on the financial results of a company business activities over a period of time. The income statement communicates how much revenue the company generated during a period and what cost it incurred in connection with generating that revenue.

Fortinet Inc., consolidated income statement

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)
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)
Product	(691,300)	(487,700)	(352,400)	(324,600)	(291,000)
Service	(393,600)	(295,300)	(217,600)	(181,300)	(159,400)
Cost of revenue	(1,084,900)	(783,000)	(570,000)	(505,900)	(450,400)
Gross profit	3,332,500)	2,559,200)	2,024,400)	1,650,300)	1,350,800)
Research and development	(512,400)	(424,200)	(341,400)	(277,100)	(244,500)
Sales and marketing	(1,686,100)	(1,345,700)	(1,071,900)	(926,900)	(782,300)
General and administrative	(169,000)	(143,500)	(119,500)	(102,100)	(93,000)
Gain on intellectual property matter	4,600)	4,600)	40,200)	—)	—)
Operating expenses	(2,362,900)	(1,908,800)	(1,492,600)	(1,306,100)	(1,119,800)
Operating income	969,600)	650,400)	531,800)	344,200)	231,000)
Interest income	17,400)	4,500)	17,700)	42,500)	26,500)
Interest expense	(18,000)	(14,900)	—)	—)	—)
Other expense, net	(13,500)	(11,600)	(7,800)	(7,500)	(6,600)
Income before income taxes and loss from equity method investment	955,500)	628,400)	541,700)	379,200)	250,900)
(Provision for) benefit from income taxes	(30,800)	(14,100)	(53,200)	(52,700)	81,300)
Loss from equity method investment	(68,100)	(7,600)	—)	—)	—)
Net income including non-controlling interests	856,600)	606,700)	488,500)	326,500)	332,200)
Net loss attributable to non-controlling interests, net of tax	700)	100)	—)	—)	—)
Net income attributable to Fortinet, Inc.	857,300)	606,800)	488,500)	326,500)	332,200)

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).

Revenue Trends: Revenue demonstrated a consistent upward trajectory, increasing from $1.8 billion in 2018 to $4.42 billion in 2022. Both product and service revenues contributed to this growth, with product revenue rising from $674.4 million to $1.78 billion and service revenue growing from $1.13 billion to $2.64 billion over the same period.
Cost of Revenue and Gross Profit: The cost of revenue increased significantly in line with revenue, moving from approximately $450.4 million in 2018 to about $1.08 billion in 2022. Product costs and service costs both rose, with product costs increasing from $291 million to $691 million and service costs from $159.4 million to $393.6 million. Despite these increases, gross profit expanded robustly, nearly doubling from $1.35 billion to $3.33 billion, reflecting improving efficiency or pricing power in the business.
Operating Expenses: Operating expenses saw a marked increase, from roughly $1.12 billion in 2018 to $2.36 billion in 2022. This includes growth in research and development expenses, which rose from $244.5 million to $512.4 million, indicating a strong focus on innovation and product development. Sales and marketing expenses also increased from $782.3 million to $1.69 billion, suggesting intensified efforts to support revenue growth. General and administrative costs grew moderately from $93 million to $169 million. Notably, the company recorded gains related to intellectual property matters in 2020 and subsequent years, which contributed positively to overall expenses.
Operating Income: Operating income increased substantially, from $231 million in 2018 to $969.6 million in 2022, reflecting effective management of cost growth relative to revenue expansion. The gain from intellectual property issues provided a marginal boost during the 2020 to 2022 period.
Interest and Other Expenses: Interest income fluctuated, peaking in 2019 at $42.5 million before declining and slightly recovering in 2022. Interest expenses began to be recognized starting in 2021, with $14.9 million, rising to $18 million in 2022, potentially indicating new debt obligations. Other expenses remained relatively stable, gradually increasing from $6.6 million to $13.5 million.
Income Taxes and Net Income: Income before taxes followed a similar growth pattern to operating income, increasing from $250.9 million in 2018 to $955.5 million in 2022. The provision for income taxes varied, switching from a benefit of $81.3 million in 2018 to a provision of $30.8 million in 2022. The company experienced losses from equity method investments starting in 2021, significantly increasing in 2022 to $68.1 million, which may have impacted net income.
Net Income Attributable to Fortinet, Inc.: Net income showed sustained growth from $332.2 million in 2018 to $857.3 million in 2022. Despite fluctuations in tax benefits and losses in equity investments, the company's profit attributable to shareholders more than doubled over this period. Non-controlling interests had a minimal impact on net income throughout the years.

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Fortinet Inc. (NASDAQ:FTNT)

Income Statement