Fortinet, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the Fortinet fourth quarter 2020 earnings announcement. At this time, all participant lines are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star then 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star then 0. I would now like to hand the compass over to your host today, Peter Sarkowski, Vice President of Investor Relations. Please go ahead.

Thank you, Sarah. Good afternoon, everyone. This is Peter Sarkowski, Vice President of Investor Relations at Fortinet. I am pleased to welcome everyone to our call to discuss Fortinet's fiscal results for fourth quarter of 2020. Speakers on today's call are Ken Vee, Fortinet's Founder, Chairman and CEO, and Keith Jensen, CFO. 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. Keith will then review our financial and operating results for the fourth quarter, providing guidance for the first quarter of 2020 and the full year. 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 stated otherwise. Our gap to results and gap 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 the Investor Relations website. Lastly, all references to growth are on a year-over-year basis unless noted otherwise. I will now turn the call over to Ken.

Thanks, Peter, and thank you to everyone for joining today's call to review our first quarter and four-year 2020 result. First quarter building increased 20% to $961 million. Our secure SD-WAN offering accounted for over 13% of first quarter building. Product revenue accelerated quarter over quarter to 21%, contributing to a total revenue growth of 21%. Operation margin benefits from solid revenue performance we achieved an all-time company record non-gap opportunity margin of 29.4% for the fourth quarter. Given the many opportunities ahead, we plan to shift our focus more to growth for at least the next few quarters. Today, we announced Fortinet 7.0 with 300 new features and updates. With this release, Fortinet is the only leading cybersecurity vendor to offer firewall-based, zero-trust network access enabling remote access to replace the traditional VPN. This reduced the attack surface while improving the user experience. 14S Zero Trust network access solution also simplified management by using the same access policy whether on or off networks. Tight integration of a SASE solution with the 4DOS 7.0 gave enterprise the flexibility they need to enable their workforce to work from home with consistent enterprise-grade security delivered on-premise or now more cloud-based SaaS consumption for security as a service. The 40OS M.0 extends network connectivity and security beyond the one age with innovation in 5G and LTE that improve the web's network performance and increase resilience. Our 5G offering enables organizations to achieve secure, scalable, and highly available network connectivity anywhere. The release of FortiWire 7.0 expands the Fortinet security fabric delivering on our mission to provide broad, integrated, and automated security to any device, any application, everywhere. Cybersecurity is an inflection point and increasingly organizations are consolidating towards a platform approach and not just a separate platform for endpoint network security or cloud security, but a holistic platform that is integrated, automated across all these areas. The 49 Security Fabric is a cybersecurity platform built on broad and deep set of networking and security technology from endpoint to network to cloud. organically built to seamlessly communicate and operate together. This consolidation with our secure driven networking approach will be key drivers going forward. Today Fortinet is recognized in eight Gardner magic quadrants. Our FortiGate product is a leader in both SD-WAN and next-generation firewall magic quadrants. We continue to experience excellent adoption of a secure SD-WAN and expect our unique solution to become the market share leader within a few years. In addition to our growth drivers, we estimate our total addressable market will grow at an annual compound rate of 10% over the next four years to reach 93 billion by 2024. The recent solar wind security incident and the pandemic elevated the need for a broad, integrated, and automated platform and we expect companies to raise the percentage of IT spending used for security as they work to secure their entire infrastructure across multiple edges in a zero-trust environment. Before turning the call over to Keith, I would like to thank our employees, customers, and partners worldwide for their continued support to manage our response to the ongoing COVID-19 pandemic.