Fortinet, Inc.

Hello and welcome to Fortinet's first quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, we will conduct a question and answer session. Please be advised that this call is being recorded. I would now like to hand the call over to Aaron Ovadia, Senior Director of Investor Relations. Please go ahead.

Thank you and good afternoon, everyone. This is Aaron Ovadia, Senior Director of Investor Relations at Fortinet. I am pleased to welcome everyone to our call to discuss Fortinet's financial results for the first quarter of 2025. Joining me on today's call are Ken Zee, Fortinet's founder, chairman, and CEO, Keith Jensen, our CFO, Christiana Olgaard, our CAO and sales operations leader, and John Whittle, our COO. As a reminder, Keith will be stepping down from the CFO role on May 15th, and Christiana will take over as our next CFO. Ken will begin our call today by providing a high-level perspective on our business. Keith will then review our financial results for the first quarter of 2025, and Christiana will provide a forward-looking view, including guidance for the second quarter and updating the full year. We will 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 otherwise stated. Our GAAP results and GAAP to non-GAAP reconciliations are located in our earnings press release and in the presentation that accompany today's remarks. both of which are posted on our investor relations website. As a reminder, this is a live call. It will be available for replay via webcast on our investor relations website. The prepared remarks will also be posted on the quarterly earnings section of our IR website following today's call. Lastly, all references to growth are on a year-over-year basis unless noted otherwise. I will now turn the call over to Ken.

Thank you, Erin, and thank you to everyone for joining our call. We are pleased with our strong performance in the first quarter, successfully balancing growth and profitability, including building a revenue growth of 14%, record first quarter operation margin of 34%, record free cash flow of 783 million, a margin of 51%, and strong growth in secure operations and unified SASE with security service age building growth of over 110%, which drove our unified SASE building growth to 18%, accounting for 25% of our business. The Fortinet leadership in innovation and long-term investment is evident in our market position as the number one deployed firewall vendor worldwide, a market leader in SD-WAN and OT security, and with our strong SaaS strategy and growth, we are confident we'll be number one in this space as well. The strong momentum behind our unified SASE pillar underscores the value customers place on our single OS platform. The typical SASE journey begins with a customer initial purchase of Fortinet's industry-leading ASIC-based FortiGate firewall, powered by FortiOS. From there, the majority of large enterprise customers expand into SD-WAN before progressing into our FortiSASE solution. This expansion path continues to grow as 73% of large enterprise customers have now adopted our SD-WAN solution and have either begun or are well positioned to transition to 40-SASI. With our 40-SASI penetration among large enterprises increasing nearly 10% quarter over quarter to 11%. We remind the only vendor to have organically develop all of the core SASE capability within a single operation system for DOS, including NetGen Firewall, SD-WAN, ZTNA, Secure Web Gateway, CASB, and DLP technologies. This native integration of networking and security reduce the capacity and operation cost while enhancing user experience and ensuring secure across both on-premise and cloud environments. In addition to our traditional SASE offering, we also offer Sovereign SASE, a tailored solution for large enterprise and service providers that require full on-premise or in-country control of their data. With Sovereign SASE, customers can deploy FortiSASE within their own data centers, ensuring that all data is processed exclusively through customer-owned or country-specific locations to meet compliance requirements by country or industry regulations. This approach accelerates performance through our FortiASIC technology and is well-suited for highly regulated sectors such as finance, government, and healthcare. AI-driven secure operation building increased by 29%, accounting for 10% of our business, as customers continue to consolidate multiple security vendors on our integrated and AI-enhanced fully-fabric solution. Looking ahead, in addition to SaaS and secure op, we expect OT security and AI to be key growth drivers over the next five years. In OT security, a rapidly expanding market driven by a surge in connected devices, Fortinet is recognized as the only leader in the Westland Advisory Report, supported by over a decade of strategic investment and specialized solution positionals for continued growth. We also continue to invest in our AI capabilities, which we began developing more than 15 years ago and now hold over 500 issued and pending AI patents, more than any other competitors. With our AI technology now integrated into a dozen products, new AI capabilities like FortiAI Assist for automating security tasks, FortiAI Protect for advanced threat detection, and FortiAI Secure AI for protecting AI infrastructure. Today, we announce the FortiGate 700G series, a high-performance firewall for mid-sized business and distributed enterprise. powered by our 40ASIC technology, which delivers a 5 to 10x performance advantage over competitors, and 40OS, the only operating system recognized across five secure networking Gartner Magic Quadrants. This approach significantly lowered total cost of ownership and complexity while reducing energy consumption and drive Foodnet's continued strong growth and market share gain in secure networking. I would like to thank our employees, customers, partners, and suppliers worldwide for their continued support and hard work. I will now turn the call over to Keith and Christiana.