Analysis of Geographic Areas
Fortinet Inc. operates in 3 regions: Americas; Europe, Middle East and Africa (EMEA); and Asia Pacific (APAC).
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 | 2.12 | 2.11 | 2.57 | 2.84 | 3.10 |
| Europe, Middle East and Africa (EMEA) | 47.13 | 41.16 | 48.15 | 53.55 | 41.85 |
| Asia Pacific (APAC) | 49.51 | 60.47 | 67.35 | 74.56 | 39.16 |
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 analysis of geographic asset turnover ratios reveals significant disparities in asset efficiency between the Americas and the international regions. While the Americas region exhibits a low and generally declining turnover rate, both the Europe, Middle East and Africa (EMEA) and Asia Pacific (APAC) regions maintain substantially higher ratios, indicating a significantly higher volume of revenue generated per unit of asset deployed in those markets.
- Americas
- A consistent downward trajectory is observed from 2018 to 2021, with the ratio decreasing from 3.10 to 2.11. A period of stabilization followed in 2022, where the ratio remained nearly flat at 2.12, reflecting a general reduction in asset utilization efficiency over the five-year period.
- Europe, Middle East and Africa (EMEA)
- This region exhibits a volatile yet high-efficiency pattern. The ratio rose from 41.85 in 2018 to a peak of 53.55 in 2019, followed by a decline to 41.16 in 2021. A recovery was noted in 2022, with the ratio increasing to 47.13.
- Asia Pacific (APAC)
- The most pronounced fluctuation is observed in this region, characterized by a sharp increase from 39.16 in 2018 to a peak of 74.56 in 2019. This was followed by a sustained annual decline through 2022, ending at 49.51. Despite this downward trend since 2019, the region's asset turnover remains markedly higher than that of the Americas.
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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 | 1,785,000) | 1,358,800) | 1,077,200) | 917,300) | 762,900) |
| Property and equipment, net | 843,600) | 644,900) | 419,600) | 323,400) | 246,000) |
| Area Activity Ratio | |||||
| Area asset turnover1 | 2.12 | 2.11 | 2.57 | 2.84 | 3.10 |
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
= 1,785,000 ÷ 843,600 = 2.12
Between 2018 and 2022, the Americas region experienced substantial growth in both top-line revenue and capital investment, although the rate of asset accumulation exceeded the rate of revenue growth.
- Revenue Growth
- Revenue increased consistently from 762.9 million US dollars in 2018 to 1.785 billion US dollars by the end of 2022. This represents a significant upward trajectory, with the most pronounced nominal increase occurring between 2021 and 2022.
- Capital Investment Trends
- Property and equipment, net, rose from 246 million US dollars in 2018 to 843.6 million US dollars in 2022. The expansion of the physical asset base accelerated particularly after 2020, indicating a period of aggressive capital expenditure within the region.
- Area Asset Turnover Analysis
- The area asset turnover ratio exhibited a steady decline from 3.10 in 2018 to 2.11 in 2021, before stabilizing at 2.12 in 2022. This downward trend reveals that the growth in the asset base outpaced the growth in revenue, leading to a decrease in the efficiency of asset utilization relative to revenue generation over the five-year period.
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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 | 1,691,800) | 1,275,900) | 991,900) | 813,900) | 678,000) |
| Property and equipment, net | 35,900) | 31,000) | 20,600) | 15,200) | 16,200) |
| Area Activity Ratio | |||||
| Area asset turnover1 | 47.13 | 41.16 | 48.15 | 53.55 | 41.85 |
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
= 1,691,800 ÷ 35,900 = 47.13
The financial performance of the EMEA region from 2018 to 2022 is characterized by consistent revenue expansion and a fluctuating but generally high asset turnover ratio. Revenue grew steadily throughout the period, increasing from US$ 678 million in 2018 to US$ 1.69 billion by the end of 2022, representing a substantial growth trajectory in market reach.
- Revenue Growth Trends
- Revenue experienced an uninterrupted upward trend over the five-year period. The growth rate accelerated in the latter years, with the most significant year-over-year increase occurring between 2021 and 2022, where revenue rose from US$ 1.28 billion to US$ 1.69 billion.
- Net Property and Equipment Investment
- Investment in net property and equipment remained relatively stable between 2018 and 2019, before entering a period of aggressive expansion. Net assets grew from US$ 15.2 million in 2019 to US$ 35.9 million in 2022, with the most pronounced increases occurring in 2020 and 2021, suggesting a scaling of physical infrastructure to support regional growth.
- Area Asset Turnover Analysis
- The area asset turnover ratio exhibited volatility despite the consistent rise in revenue. The ratio peaked in 2019 at 53.55, followed by a steady decline to a period low of 41.16 in 2021. This decline coincided with the sharp increase in property and equipment investments, which temporarily outpaced revenue gains in terms of efficiency. However, a recovery was observed in 2022, with the ratio rising to 47.13, indicating improved asset utilization as revenue growth again accelerated relative to asset accumulation.
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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 | 940,600) | 707,500) | 525,300) | 425,000) | 360,300) |
| Property and equipment, net | 19,000) | 11,700) | 7,800) | 5,700) | 9,200) |
| Area Activity Ratio | |||||
| Area asset turnover1 | 49.51 | 60.47 | 67.35 | 74.56 | 39.16 |
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
= 940,600 ÷ 19,000 = 49.51
The Asia Pacific (APAC) region exhibits a strong and consistent trajectory of revenue growth from 2018 to 2022, accompanied by an initial reduction and subsequent acceleration in net property and equipment investments. This dynamic resulted in a significant peak in asset efficiency in 2019, followed by a gradual decline as the asset base expanded to support scaling operations.
- Revenue Trends
- Revenue in the APAC region increased steadily from 360.3 million US dollars in 2018 to 940.6 million US dollars by the end of 2022. The growth trajectory accelerated notably after 2020, suggesting a period of rapid market penetration and scaled operations within the region.
- Net Property and Equipment Investment
- A non-linear trend is observed in physical asset investment. Net property and equipment decreased from 9.2 million US dollars in 2018 to 5.7 million US dollars in 2019. However, this was followed by a consistent expansion phase from 2020 through 2022, where the asset base more than doubled from 7.8 million US dollars to 19.0 million US dollars, indicating a shift toward increased capital expenditure to support regional growth.
- Area Asset Turnover Interpretation
- The area asset turnover ratio peaked at 74.56 in 2019, a result of increasing revenue coinciding with a reduction in the net asset base. Subsequent years show a consistent downward trend, with the ratio falling to 67.35 in 2020, 60.47 in 2021, and 49.51 in 2022. This compression suggests that the recent growth in property and equipment has outpaced the growth in revenue on a relative basis, although the 2022 ratio remains higher than the 2018 baseline of 39.16.
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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 | 1,325,000) | 1,006,800) | 813,300) | 693,300) | 577,200) |
| Other Americas | 460,000) | 352,000) | 263,900) | 224,000) | 185,700) |
| Americas | 1,785,000) | 1,358,800) | 1,077,200) | 917,300) | 762,900) |
| Europe, Middle East and Africa (EMEA) | 1,691,800) | 1,275,900) | 991,900) | 813,900) | 678,000) |
| Asia Pacific (APAC) | 940,600) | 707,500) | 525,300) | 425,000) | 360,300) |
| Total | 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 experienced consistent and accelerating growth over the five-year period from 2018 to 2022, rising from 1.80 billion USD to 4.42 billion USD. This overall upward trajectory is reflected across all geographic segments, indicating a broad-based expansion of the global market presence.
- Americas Regional Performance
- Revenue from the Americas increased from 762.9 million USD in 2018 to 1.79 billion USD in 2022. The United States remains the primary driver within this segment, with revenues increasing from 577.2 million USD to 1.33 billion USD. Additionally, the Other Americas sub-segment demonstrated significant expansion, more than doubling its revenue from 185.7 million USD in 2018 to 460 million USD in 2022.
- Europe, Middle East, and Africa (EMEA) Performance
- The EMEA region showed robust and steady growth, with revenue climbing from 678 million USD in 2018 to 1.69 billion USD in 2022. This region has maintained a consistent contribution to the total revenue mix, ending the period as a primary revenue driver alongside the Americas.
- Asia Pacific (APAC) Performance
- Revenue from the APAC region grew from 360.3 million USD in 2018 to 940.6 million USD in 2022. While starting as the smallest geographic segment, APAC exhibited strong growth, increasing its relative contribution to total revenue from approximately 20% in 2018 to over 21% in 2022.
- Geographic Revenue Distribution
- The distribution of revenue remained relatively balanced throughout the analysis period. While the Americas and EMEA provided the largest volumes of revenue, the accelerated growth in the APAC region indicates a successful penetration into Asian markets. The total revenue growth rate intensified toward the end of the period, with the jump from 2021 to 2022 representing the largest absolute increase in revenue across all analyzed years.
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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 | 638,100) | 472,400) | 296,300) | 197,400) | 132,100) |
| Other Americas | 205,500) | 172,500) | 123,300) | 126,000) | 113,900) |
| Americas | 843,600) | 644,900) | 419,600) | 323,400) | 246,000) |
| Europe, Middle East and Africa (EMEA) | 35,900) | 31,000) | 20,600) | 15,200) | 16,200) |
| Asia Pacific (APAC) | 19,000) | 11,700) | 7,800) | 5,700) | 9,200) |
| Total | 898,500) | 687,600) | 448,000) | 344,300) | 271,400) |
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).
Net property and equipment exhibited a consistent and substantial upward trajectory between 2018 and 2022, increasing from 271.4 million to 898.5 million. This represents a total growth of approximately 231% over the period, signaling a significant expansion in the company's physical asset base.
- Americas Asset Expansion
- The Americas region is the primary driver of capital expenditure and asset growth. The United States segment demonstrated the most aggressive increase, rising from 132.1 million in 2018 to 638.1 million in 2022. Other Americas also showed steady growth, increasing from 113.9 million to 205.5 million. Consequently, the total for the Americas rose from 246.0 million to 843.6 million, reflecting a heavy investment focus in this geographic area.
- International Market Trends
- Asset levels in the EMEA and APAC regions are significantly lower than those in the Americas. The EMEA region saw a general increase from 16.2 million in 2018 to 35.9 million in 2022. The APAC region experienced a decline in 2019, dropping to 5.7 million from 9.2 million in 2018, before entering a recovery phase and reaching 19.0 million by the end of 2022.
- Geographic Concentration Analysis
- A trend of increasing geographic concentration is observed. In 2018, the Americas accounted for approximately 90.6% of the total net property and equipment. By 2022, this proportion increased to approximately 93.9%. The growth in total assets is almost entirely attributable to the United States, which grew from representing roughly 48.7% of total assets in 2018 to 71.0% in 2022.
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