Fortinet, Inc.

Good day and thank you for standing by. Welcome to the Fortinet fourth quarter 2023 earnings announcement. At this time, all participants 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'll need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your host today, Peter Salkowski, Senior Vice President of Investor Relations. Please go ahead.

Thank you, Liz. Good afternoon, everyone. This is Peter Salkowski, Senior Vice President of Finance and Investor Relations at Fortinet. I'm pleased to welcome everyone to our call to discuss Fortinet's financial results for the fourth quarter of 2023. Joining me on today's call are Ken Zee, Fortinet's founder, chairman, and CEO, Keith Jensen, our Chief Financial Officer, and John Whittle, our Chief Operating 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. Keith will then review our financial and operating results for the full year in the fourth quarter of 2023 before providing guidance for the first quarter of 2024 in the full year. We'll then open the call for questions. During the Q&A session, we ask that you please 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 GAAP results and our GAAP to non-GAAP reconciliations are 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. The prepared remarks for today's earnings call will be posted in the quarterly earnings section of our Investor Relations website immediately following the call. Lastly, all references to growth are on a year-over-year basis unless noted otherwise. And we'll now turn the call over to Ken.

Thank you, Peter, and thank you to everyone for joining our call. In Q4, total billing grew 8.5% to $1.9 billion, driven by an increased focus on secure ARP, SASE, and improved execution for our sales team. We closed six eight-figure deals across five industry verticals. All six of these transactions, including all three of our SASE, secure ARP, and secure networking solutions, is treating our value of an integrated platform and that's spent across on-premise and cloud, as well as our 40 ASIC technology advantages. Food in a total addressable market across secure app, SASE, and secure networking expect an increase from $150 billion in 2024 to $208 billion by 2027. Our customer base consists of 76% of Fortune 100, including nine of the top 10 technology companies, nine of the top 10 manufacturers, and nine of the top 10 health care. Our secure building growth, 44%, accounted for 11% of total building, with strong performance from several solutions, including EDR, SIM, email security, and NDR, to automatically detect, investigate, and respond to threats. Unified society building growth, 19%, account for 21% of the total building. We believe Fortinet is the only company with a unified SaaS solution all integrated into a single FortiOS that including a full networking and security stack consisting of a market leading SD-WAN, ZTLA, Secure Web Gateway, CASB, and firewall as a service designed for on-premise and cloud. Our 40-size solution is gaining momentum quickly as we close our first eight-figure SASE deal for 350,000 seeds. In Q4, we added 40 new features to our SASE solution, including support for over 150 POP locations worldwide and the ability to protect thin-edge device. we see a huge opportunity to attach Fortinet SASE to tens of thousands of SE1 customers. Secure networking accounts for 60% of our building and represents our largest addressable market. Gartner expects the secure networking market to overtake the traditional networking market by 2030. Fortinet is the number one network security vendor with over half the global firewall deployment. In addition to physical firewall, we offer virtual, cloud-native, and firewall-as-a-service solution, all based on our 4D OS operation system, consolidate over 30 networking and security functions together. Converged security and networking require more specialized computing power than traditional networking. Our 4D ASIC-powered 4D gate delivers 3 to 10x more performance as indicated by secure computing routing with every new FortiGate product release. The latest FortiASIC SP5 based FortiGate 70G with DL5G in recognized format secure device within operation technology environment. It is of a great start as a Fortune 50 company and an eight-figure operation technology deal feature this new FortiGate in the fourth quarter. Also included with our 40OS operating system is a fully-featured access point controller. Recently, we announced a new secured access point product, making us the first vendor to announce a business-grade Wi-Fi 7 product. Fortinet has consistently been an innovative cybersecurity company, and this earning call won't be complete without a few words about our AI. We have invested heavily in AI across every function and product. For over a decade, Fortinet has used machine learning and AI to provide advanced threat intelligence across more than 40 products from network, endpoint, and application security. Our solution applies AI and machine learning across expanded digital attack service automatically, containing and remediating incidents within seconds. where the industry average for detection and remediation takes several days. We have also been applying GenAI technology across our entire product line, allowing customers to optimize the security effectiveness and operation efficiency. 4D AI is already available on 4DSIM and 4DSOAR, and more products will be adding this function in the coming months. Before turning the call over to Keith, I would like to thank our employees customers, partners, and suppliers worldwide for their continued support and hard work.