Analysis of Geographic Areas
Fortinet Inc. operates in 3 regions: Americas; Europe, Middle East and Africa (EMEA); and Asia Pacific (APAC).
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- Statement of Comprehensive Income
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Balance Sheet: Assets
- Enterprise Value (EV)
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Operating Profit Margin since 2009
- Return on Equity (ROE) since 2009
- Current Ratio since 2009
- Price to Book Value (P/BV) since 2009
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Area Asset Turnover
Fortinet Inc., asset turnover by geographic area
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Americas | |||||
| Europe, Middle East and Africa (EMEA) | |||||
| Asia Pacific (APAC) |
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).
- Americas Asset Turnover
- The asset turnover ratio in the Americas exhibits a consistent declining trend over the observed period. Starting from 3.10 in 2018, the ratio decreases steadily each year, reaching its lowest point of 2.11 in 2021. A slight stabilization is noted in 2022 with a marginal increase to 2.12, suggesting a potential plateau after years of decline.
- Europe, Middle East and Africa (EMEA) Asset Turnover
- The EMEA region shows a fluctuating yet generally high asset turnover ratio. The value increases notably from 41.85 in 2018 to a peak of 53.55 in 2019, followed by a decrease to 48.15 in 2020. The ratio continues to decline to 41.16 in 2021 but recovers somewhat to 47.13 in 2022. This pattern indicates volatility but maintained relatively strong performance compared to other regions.
- Asia Pacific (APAC) Asset Turnover
- The APAC region displays a high and somewhat volatile asset turnover ratio. It experiences a sharp increase from 39.16 in 2018 to 74.56 in 2019, the highest ratio across all regions and periods. Subsequent years show a downward trend from 67.35 in 2020 to 49.51 in 2022. Despite the decline, the ratio remains significantly above the level recorded in 2018, indicating strong asset utilization throughout most of the period, albeit with some decrease in recent years.
- Overall Insights
- The data reveals distinct regional differences in asset turnover trends. The Americas show a clear, steady reduction in asset turnover ratios, suggesting declining efficiency or changes in asset management. In contrast, both EMEA and APAC exhibit higher and more volatile ratios, with APAC peaking sharply in 2019 before gradually decreasing. EMEA's turnover ratio fluctuates but remains elevated relative to the Americas. These patterns may reflect regional market dynamics, operational strategies, or investment cycles impacting asset utilization differently across geographic areas.
Area Asset Turnover: Americas
Fortinet Inc.; Americas; area asset turnover calculation
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Revenue | |||||
| Property and equipment, net | |||||
| Area Activity Ratio | |||||
| Area asset turnover1 | |||||
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).
1 2022 Calculation
Area asset turnover = Revenue ÷ Property and equipment, net
= ÷ =
- Revenue Trend
- Revenue in the Americas geographic area has demonstrated consistent growth over the five-year period. Starting from $762.9 million in 2018, revenue steadily increased each year, reaching $1.785 billion by 2022. The growth rate appears to have accelerated particularly after 2020, with substantial year-over-year increases, indicating expanding market presence or increased sales activities in this region.
- Property and Equipment, Net
- Net property and equipment investments exhibit a strong upward trend. The asset base grew from $246 million in 2018 to $843.6 million by 2022. This substantial increase suggests significant capital expenditures and infrastructure development, likely supporting the revenue growth and operational scale expansion within the Americas area.
- Area Asset Turnover
- The area asset turnover ratio, which reflects how efficiently the company utilizes its assets to generate revenue, shows a declining trend over the observed period. Starting at 3.1 in 2018, the ratio decreased progressively each year to approximately 2.12 in 2022. This decline indicates that although assets have grown substantially, revenue growth has not kept pace proportionally with these asset increases, implying a reduction in asset utilization efficiency in this geographic area.
- Summary of Insights
- Overall, the Americas segment experienced robust top-line growth supported by heavy investment in property and equipment assets. However, the declining asset turnover ratio highlights a potential concern regarding the efficiency of asset deployment. Management may need to investigate operational strategies to improve how assets are leveraged to sustain strong revenue growth while optimizing capital investment.
Area Asset Turnover: Europe, Middle East and Africa (EMEA)
Fortinet Inc.; Europe, Middle East and Africa (EMEA); area asset turnover calculation
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Revenue | |||||
| Property and equipment, net | |||||
| Area Activity Ratio | |||||
| Area asset turnover1 | |||||
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).
1 2022 Calculation
Area asset turnover = Revenue ÷ Property and equipment, net
= ÷ =
- Revenue
- The revenue exhibited consistent growth over the five-year period, increasing from $678,000 thousand in 2018 to $1,691,800 thousand in 2022. This reflects a strong upward trend with the most significant annual increase occurring between 2021 and 2022.
- Property and equipment, net
- The net value of property and equipment increased steadily from $16,200 thousand in 2018 to $35,900 thousand in 2022. The growth accelerated notably after 2019, with particularly large increases between 2020 and 2022, suggesting ongoing investments in tangible assets.
- Area asset turnover
- The area asset turnover ratio demonstrated variability throughout the period. It peaked at 53.55 in 2019, then declined to 41.16 in 2021, indicating a reduction in efficiency of asset utilization. However, there was a moderate recovery in 2022, with the ratio rising to 47.13. Despite this rebound, the 2022 figure remained below the 2019 peak.
Area Asset Turnover: Asia Pacific (APAC)
Fortinet Inc.; Asia Pacific (APAC); area asset turnover calculation
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||
| Revenue | |||||
| Property and equipment, net | |||||
| Area Activity Ratio | |||||
| Area asset turnover1 | |||||
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).
1 2022 Calculation
Area asset turnover = Revenue ÷ Property and equipment, net
= ÷ =
The financial data for the Asia Pacific (APAC) region demonstrates distinct trends over the five-year period ending December 31, 2022.
- Revenue
- The revenue has shown a consistent and substantial upward trajectory from 2018 to 2022. Starting at $360.3 million in 2018, it increased steadily each year, reaching $940.6 million by 2022. This represents a growth of approximately 161% over the five-year span, indicating strong expansion and market penetration within the region.
- Property and Equipment, Net
- The net value of property and equipment fluctuated initially but followed an overall upward direction. It decreased significantly from $9.2 million in 2018 to $5.7 million in 2019, then rebounded to $7.8 million in 2020. From 2020 onward, the net property and equipment consistently increased, reaching $19.0 million in 2022. This escalation suggests increased investment in physical assets that may support operational growth and capacity enhancement in APAC.
- Area Asset Turnover Ratio
- The area asset turnover ratio, an efficiency measure indicating revenue generated per unit of fixed assets, showed a declining trend over the period. It started at a high level of 39.16 in 2018, peaked at 74.56 in 2019, but then decreased steadily each subsequent year to 49.51 in 2022. Despite revenue growth, this decreasing ratio may indicate that asset growth has outpaced revenue gains or that assets are currently under-utilized relative to past efficiency levels.
Overall, the data portrays robust revenue growth paired with increasing investment in fixed assets. The declining asset turnover ratio suggests that while the company is expanding its asset base in the APAC region, it may face challenges in maintaining previous levels of asset utilization efficiency.
Revenue
Fortinet Inc., revenue by geographic area
US$ in thousands
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| United States | |||||
| Other Americas | |||||
| Americas | |||||
| Europe, Middle East and Africa (EMEA) | |||||
| Asia Pacific (APAC) | |||||
| Total |
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).
The annual geographic area revenue data reveals consistent growth across all regions over the five-year period from 2018 to 2022. This growth reflects expanding market penetration and increasing sales in each geographic segment.
- United States
- The United States market demonstrates a steady and substantial increase in revenue, starting at approximately $577.2 million in 2018 and reaching about $1.325 billion in 2022. The growth accelerates particularly in the latter years, with year-over-year increases expanding from roughly $80 million between 2018 and 2019 to nearly $320 million between 2021 and 2022. This indicates strengthening demand or enhanced market share in the U.S. sector.
- Other Americas
- Revenue in the Other Americas region also exhibits consistent upward movement, growing from $185.7 million in 2018 to $460.0 million in 2022. The growth trend appears steady, with year-over-year increments averaging around $50 to $90 million, reflecting expanding operations and possibly developing markets outside the United States within the Americas.
- Americas (Aggregate)
- Combining the United States and Other Americas, the Americas region shows an aggregated increase from roughly $763 million in 2018 to $1.785 billion in 2022. This segment's growth follows a similar pattern to its components, indicating balanced contribution from both markets to overall regional growth.
- Europe, Middle East, and Africa (EMEA)
- The EMEA region presents notable growth, increasing from $678.0 million in 2018 to $1.692 billion in 2022. The revenue growth accelerates across the years, with significant jumps particularly after 2019, suggesting successful expansion strategies or increased adoption of products/services throughout these markets. The consistent year-over-year increases underscore the strategic importance of this region.
- Asia Pacific (APAC)
- APAC revenues grow from $360.3 million in 2018 to $940.6 million in 2022. The revenue stream shows a steady upward trajectory, with incremental increases each year, notably gaining momentum after 2019. This significant percentage growth reflects expanding market opportunities and increased commercial presence in the Asia Pacific region.
- Total Revenue
- Overall total revenue increases markedly from $1.801 billion in 2018 to $4.417 billion in 2022, more than doubling over the five-year span. The growth rate accelerates over time, revealing strong momentum in all geographic areas and a successful scaling of business operations internationally. The consistent year-over-year revenue increases indicate robust demand and effective geographic diversification.
Property and equipment, net
Fortinet Inc., property and equipment, net by geographic area
US$ in thousands
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| United States | |||||
| Other Americas | |||||
| Americas | |||||
| Europe, Middle East and Africa (EMEA) | |||||
| Asia Pacific (APAC) | |||||
| Total |
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).
The property and equipment net values across geographic areas demonstrate a consistent upward trajectory from 2018 through 2022. This indicates an ongoing investment in physical assets over the analyzed period. The data reveal several noteworthy patterns and trends.
- United States
- There is a significant and steady increase in property and equipment net values, rising from $132.1 million in 2018 to $638.1 million in 2022. This represents nearly a fivefold increase over the five-year span, showing substantial growth and possibly expanding operations or capacity in this region.
- Other Americas
- The "Other Americas" segment also exhibits growth, though at a more moderate pace compared to the United States. Values increased from $113.9 million in 2018 to $205.5 million in 2022. While the rise is consistent, it is less steep, indicating steady but less aggressive investment or expansion.
- Americas (Aggregate)
- The combined Americas figure, which sums the United States and Other Americas, reflects an increasing trend from $246 million in 2018 to $843.6 million in 2022. This confirms the dominant role of the Americas region in overall property and equipment investment and highlights particularly strong growth momentum in this aggregate category.
- Europe, Middle East, and Africa (EMEA)
- Property and equipment net values in the EMEA region show a gradual increase over the period, growing from $16.2 million in 2018 to $35.9 million in 2022. The increments year-over-year are smaller compared to the Americas, implying a more conservative expansion or asset investment strategy within this region.
- Asia Pacific (APAC)
- Although the smallest in absolute terms, the APAC segment displays growth as well, ascending from $9.2 million in 2018 to $19 million in 2022. The growth rate is notable given the relatively low starting point, which may signal emerging investments or development of infrastructure in the region.
- Total Property and Equipment Net
- The total net property and equipment value has markedly increased, rising from $271.4 million in 2018 to $898.5 million in 2022. This nearly 3.3 times increase underscores a consistent and broad-based expansion of physical assets globally. The Americas region is the primary contributor to this trend, with EMEA and APAC showing more modest increments.
In summary, the data illustrate a robust and expanding asset base, heavily concentrated in the Americas, particularly the United States. The growth patterns suggest strategic scaling of operations and infrastructure investment, with a stronger emphasis on the Americas, while EMEA and APAC experience steady but less aggressive asset accumulation.