Name: Fortinet Inc. (NASDAQ:FTNT) | Income Statement
Creator: Stock Analysis on Net

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.

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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).

Between 2018 and 2022, a consistent upward trajectory in top-line growth and operational profitability is observed. Total revenue increased from 1.80 billion US dollars to 4.42 billion US dollars, representing a significant expansion of the business scale over the five-year period.

Revenue Composition and Growth: Revenue growth is driven by both product and service segments. Product revenue grew from 674.4 million US dollars in 2018 to 1.78 billion US dollars in 2022, while service revenue increased from 1.13 billion US dollars to 2.64 billion US dollars in the same period. Service revenue consistently constitutes the majority of the total revenue stream, indicating a strong recurring revenue model.
Gross Profitability: Gross profit expanded from 1.35 billion US dollars in 2018 to 3.33 billion US dollars in 2022. The gross margin remained remarkably stable throughout the period, maintaining a level of approximately 75% of total revenue, which suggests that the cost of revenue scaled linearly with sales growth.
Operating Expense Analysis: Operating expenses increased from 1.12 billion US dollars in 2018 to 2.36 billion US dollars in 2022. The largest component of these expenses is sales and marketing, which rose from 782.3 million US dollars to 1.69 billion US dollars. Research and development expenses more than doubled, increasing from 244.5 million US dollars to 512.4 million US dollars. General and administrative costs grew at a slower pace, rising from 93.0 million US dollars to 169.0 million US dollars.
Operating Income and Leverage: Operating income grew from 231.0 million US dollars in 2018 to 969.6 million US dollars in 2022. The growth in operating income outpaced the growth in total revenue, indicating positive operating leverage where the company's infrastructure and fixed costs are being utilized more efficiently as the business scales.
Net Income and Non-Operating Items: Net income attributable to Fortinet, Inc. increased from 332.2 million US dollars in 2018 to 857.3 million US dollars in 2022. Notable shifts in the later years include the introduction of interest expenses starting in 2021 and a substantial increase in losses from equity method investments, which reached 68.1 million US dollars in 2022.

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