Fortinet Inc. (NASDAQ:FTNT)

The financial data reveals several key trends across revenue, costs, expenses, and profitability over the observed periods.

Revenue Trends

Total revenue exhibited a consistent upward movement, beginning at $399.0 million in March 2018 and reaching a peak of approximately $1.28 billion by March 2023, representing substantial growth over five years. Both product and service revenue streams contributed to this increase, with service revenue demonstrating a steadier and more continuous rise compared to product revenue, which showed greater fluctuations with notable jumps especially after mid-2020.

Cost of Revenue and Gross Profit

Cost of revenue increased in line with revenue growth, rising from $97.2 million in March 2018 to $307.8 million in March 2023. Despite the rising cost base, gross profit also grew significantly, starting at $301.8 million and peaking at $985.7 million in December 2022 before slightly falling to $954.5 million in March 2023. The gross margin appears to have improved overall, suggesting better cost management or favorable pricing dynamics over time.

Operating Expenses

Operating expenses, comprising research and development (R&D), sales and marketing, and general and administrative (G&A) expenses, generally increased across the periods. R&D expenses almost tripled from $59.1 million to $151.1 million, reflecting sustained investment in innovation. Sales and marketing expenses also grew substantially from $185.3 million to $478.3 million, indicating an emphasis on expanding market presence. G&A expenses showed a moderate rise from $25.0 million to $52.8 million, reflecting the scaling of administrative functions.

Operating Income

Operating income demonstrated strong growth over the periods, increasing from $32.4 million in March 2018 to a peak of $357.8 million in December 2022 before declining to $273.5 million in March 2023. This illustrates improved operational efficiency and profitability despite rising operating expenses, although the recent decrease suggests some margin pressure or increased costs near the end of the period.

Interest and Other Income (Expense)

Interest income showed variability but a marked increase toward the later periods, rising significantly to $20.6 million by March 2023. Interest expense appeared starting in 2020 and remained relatively stable around $4.5 to $5.0 million. Net other income and expenses fluctuated without a clear trend, occasionally showing gains and losses.

Income Before Taxes and Net Income

Income before income taxes and losses from equity investments increased substantially, from $36.7 million in March 2018 to a high of $368.2 million in December 2022, with a slight decline to $291.1 million in March 2023. Income tax provisions varied widely, including both benefits and charges, impacting net income. Net income attributable to the company followed a similar upward trajectory, rising from $41.6 million to a peak of $313.8 million in December 2022 before declining to $247.7 million in March 2023.

Loss from Equity Method Investments

Starting in December 2020, losses from equity method investments were recorded and grew notably negative, reaching a loss of $45.2 million by June 2022, before decreasing somewhat but remaining significant. This adversely affected overall net income during the later periods.

In summary, the company has experienced strong revenue and profit growth over the five-year period, driven by expanding product and service sales, with considerable reinvestment in R&D and marketing. Operational profitability improved substantially, though recent quarters indicate some margin pressures and increased losses from equity investments. The consistent increase in interest income and stable interest expenses contributed positively to net results. Variability in tax provisions and the equity losses suggest some external or investment-related challenges impacting net income volatility toward the end of the observed timeline.