CDSA

In response to the slowdown that’s been seen in the secure networking market, Fortinet has decided to shift its marketing and sales team’s focus towards the faster-growing security operations and Secure Access Service Edge (SASE) markets over the next few quarters, according to Ken Xie, the firm’s CEO and chairman.

At the same time, Fortinet is “maintaining our consistent focus on leading innovation in secure networking and the convergence of security and networking, where we have been a leader for 23 years,” Xie told analysts Nov. 2, during an earnings call for the third quarter (ended Sept. 30).

Although Fortinet expects to see “limited near-term growth in the secure networking market, it is very important for Fortinet as we believe it enables our platform strategy with our massive footprint as the market leader in both firewall revenue and units shipped,” he explained.

The secure networking market is valued at $62 billion and is expected to increase in “high single digits annually, to $86 billion by 2027,” he noted.

Fortinet’s “consistent focus on innovating” with the Fortinet operating system (FortiOS), which “supports over 30 networking and three security applications, combined with” the company’s Application Specific Integrated Circuits (ASIC)-driven performance capabilities “provide 5x to 10x better performance on average than competitors, continues to drive our market share gains,” he said.

Meanwhile, “secure networking remains a vital part of our strategy and a market that we believe will return to double-digit annual growth over time,” he told analysts.

Fortinet has already “been innovating for some time in the faster growing segments of security operations and SASE,” he went on to say, pointing out that security operations (SecOps) is a $46 billion market growing in the mid-teens annually to $78 billion by 2027.

Fortinet’s artificial intelligence (AI) and SecOps products “empower automatic responses within seconds, all underpinned by a single consolidated management and analytics platform,” he also said.

Along with SecOps, “we’ve continued to increase our focus on SASE, a $17 billion market expected to grow at a 20 percent compound annual growth rate to $36 billion by 2027,” he said.

He added: “We believe Fortinet is the only company with a SASE service solution that can perform all functions in the cloud or in an appliance, all with a common operating system, including full networking and security stack, market leading SD-WAN offering ZTNA and management console.”

Fortinet’s SASE service solution is supported by Google Cloud, with over 100 global SASE Cloud locations, he added. Fortinet has a “track record of successful execution and believe we are the only company with strong SASE services and SecOps solutions combined in the same operating system.”

That differentiation, he said, “sets us apart and provides us with a significant competitive advantage over peers.”

Total Fortinet Q3 revenue grew 16.1% from a year ago to $1.33 billion and the company reported GAAP net income grew to $322.9 million (41 cents per diluted share) from $231.6 million (29 cents per diluted share) a year ago.

Service revenue jumped 27.6% to $868.7 million, while total billings grew 5.7% to $1.49 billion.