Fortinet, Inc.

Welcome to the third quarter earnings call. I would now like to hand the call over to Peter Salkowski. Please go ahead.

Thank you, Michelle. Good afternoon, everyone. This is Peter Salkowski, Vice President of Investor Relations at Fortinet. I'm pleased to welcome everyone to our call to discuss Fortinet's financial results for the third 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 by providing a high-level perspective on our business. Keith will then follow that with a review of our financial and operating results for the third quarter before providing guidance for the fourth quarter of 2020. We'll then open the call for questions. During the Q&A, 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 those forward-looking statements are subject to risks and uncertainties. which could cause our 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 stated otherwise. Our gap results and gap to non-gap reconciliations is located in our earnings press release and in the presentation that accompanies today's remarks, those of which are on our industrial relations website. Lastly, all references to growth are on a year-over-year basis unless noted otherwise. I'll now turn the call over to Ken.

Thanks, Peter, and thank you to everyone for joining today's call to review our third quarter 2020 results. We are very pleased with our third quarter performance. building increased 20% to $750 million. Our SD-WAN solution more than doubled year-over-year and represents over 13% of total buildings. Total revenue increased 19% to $651 million, with product revenue growth accelerating quarter-over-quarter to 14% and service revenue up 22%. Recently, Fortinet was the only vendor recognized as a leader in both the latest Garland Magic Quadrant for one-edge infrastructure and quantum magic quadrant for network firewalls. Fortinet's FortiGate SD-WAN is the only organically built solution that provides networking and security integrated into a single appliance that delivers leading protection, performance, and cost-saving for the largest customer base and fast revenue growth among major players in the space. The COVID-19 pandemic has accelerated digital transformation. An organization has to deal with new challenges to secure the whole infrastructure in a zero-trust environment, whether it's a WAN, cloud, data center, network, branch, or home edge. Fortinet is helping customers solve these issues through security-driven networking and a platform approach. FortiGate Security Fabric, which combines networking and security across the entire Connect environment, provide protection whether on-premise, virtual, or cloud-based environment. A recent Fortinet survey of cybersecurity leaders showed almost 70% of organizations are concerned about inside threats. Today, Fortinet announced the FortiGate 2600F for enterprise-level internal segmentation and hyperscale data center in multi-cloud environment, powered by the new MP7 security processor The FortiGate 2600F offered the highest performance with a secure computer reaching up to 10 times higher than our competition. Garner has stated that over the next few years, edge and immersive technologies will begin to replace cloud and mobile. The release of a seven new appliance for the ASIC SPU together with cloud and software-based virtual machine could replace security anywhere. We're unable, Fortinet, to capitalize on this investment and we'll feel our growth going forward. Before turning the call over to Keith, I would like to thank our employees, customers, partners worldwide for their continued support to manage our response to the ongoing COVID-19 pandemic.