Fortinet, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the Fortinet Second Quarter Earnings Announcement Conference Call. At this time, all participants' lines are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session, and to ask a question during this session, you need to press star 1 on your telephone. Please be advised that today's conference is being recorded, and if you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Peter Salkowski. Thank you, and please go ahead, sir.

Thank you, Chris. Good afternoon, everyone. This is Peter Salkowski, Vice President of Investor Relations at Fortinet, and I am pleased to welcome everyone to our call to discuss Fortinet's financial results for the second quarter of 2020. Speakers on today's call are Ken Zee, Fortinet's founder, chairman, and CEO, and Keith Jensen, our Chief Financial Officer. This is a live call that will be available for replay via webcast on our Investor Relations website. Ken will begin our call today by providing a high-level perspective on our business and and review our financial and operating results for the second quarter, provide some additional details regarding our second quarter performance, and some insights into how July performed before providing guidance for the third quarter of 2020. We'll then open the call for questions. During the Q&A session, we ask that you please keep your questions brief and limit yourself to one question and one follow-up question to allow others to participate. Before we begin, I'd like to remind everyone that on today's call, we will be making forward-looking statements, and these forward-looking statements are subject to risks and uncertainties. which could cause actual results to differ materially from those projected. Please refer to our SEC filings, in particular the risk factors in our most recent Form 10-K and Form 10-Q, for more information. All forward-looking statements reflect our opinions only as of the date of this presentation, and we undertake no obligation and specifically disclaim any obligation to update forward-looking statements. Also, all references to financial metrics that we make on today's call are non-GAAP unless otherwise stated. Our GAAP results and GAAP to non-GAAP reconciliations is located in our earnings press release and in the presentation that accompanies today's remarks, both of which are posted on our investor relations website. Lastly, all references to growth are on a year-over-year basis unless otherwise noted. I will now turn the call over to Ken.

Thanks, Peter, and thank you to everyone for joining today's call to review our second quarter 2020 results. We are very pleased with our solid second quarter performance. Revenue increased 18% to $616 million, with product revenue up 12% and service revenue up 22%. Secure SD-WAN climbed to 12% of a total second quarter billions. The first time it's been over 10%. In today's environment, enterprises are focused on effectively and cost-efficiently deploying security across their physical, and digital network. To meet these challenges, Fortinet was founded on the vision of bringing security and networking together in what we refer to as security-driven networking. Gartner supports a similar concept, which they call secure access service edge, or SASE. Fortinet is an industry leader in building, integrating, and automating security product and service into Fortinet security fabric, including Fortis SASE. With the recent acquisition of OPEC network, Fortinet has enhanced its Fortisasi solution with expanded cloud delivery including firewall as a service and zero trust network access. Additionally, Fortisasi was built to be partner friendly, empowering MSPs and the big global customers to easily integrate or build Fortisasi platform into their own offerings. A critical component of Furnace Secure Fabric platform is SD-WAN. We recently announced the new FortiGate ATF, which expands our SD-WAN portfolio for branch offices and work from home. The FortiGate ATF, powered by the latest FortiSPU SoC 4, can deliver security compute reading as much as 25 times higher than industry average appliance using generic CPUs. According to Ghana worldwide SD-WAN equipment market data for the first quarter of 2020, Fortinet has the highest revenue growth and was the top three for market share. We attribute this growth to our ability to deliver secure high performance SD-WAN anywhere from home to the branch to the cloud. Security investment remain a priority for enterprise and service providers. demonstrated by the strong growth of our high-end FortiGate appliance during the last quarter. Today, we released the FortiGate 4400F, the only firewall in the industry capable of securing a hyperscale data center and 5G networks. Powered by the MP7 network processor, the 4400F delivers the highest performance with security computing reaching of up to 13 times higher than our competition. The release of several new appliance powered by our latest 4D ASIC SPU together with cloud and software based virtual machine to deploy security anywhere, we are able Fortinet to capitalize on this investment and put us in a strong position going forward. Before turning the call over to Keith for a closer look at our second quarter performance and our guidance, I would like to take a moment to welcome the over 400 people who joined Fortinet during the second quarter, as well as welcome the OPAC team who recently joined. And to thank our employees, customers, and partners worldwide for their continued support to manage our response to the ongoing COVID-19 pandemic.