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Jun 13, 2023

Mixed bag in cybersecurity as Cloudflare, Fortinet and SolarWinds report quarterly earnings

UPDATED 20:00 EDT / AUGUST 03 2023 by Duncan Riley Cybersecurity-related companies reporting earnings today saw a mixed bag of results, with Cloudlfare Inc. shares up, Fortinet Inc. shares down and

UPDATED 20:00 EDT / AUGUST 03 2023

by Duncan Riley

Cybersecurity-related companies reporting earnings today saw a mixed bag of results, with Cloudlfare Inc. shares up, Fortinet Inc. shares down and SolarWinds Corp. shares surging.

For its second quarter that ended June 30, Fortinet reported adjusted earnings per share of 38 cents, up 58% year-over-year, on revenue of $1.29 billion, up 18%. Analysts had expected adjusted earnings per share of 34 cents on revenue of $1.31 billion.

Fortinet saw its product revenue increase 18% year-over-year, to $472.6 million, and service revenue grow 30%, to $820.2 million. Billings in the quarter rose 18%, to $1.54 billion.

“We will continue to focus on our key long-term growth markets of Secure Networking, Consolidated Cybersecurity Fabric, Hybrid Cloud Security, and Operational Technology, which have a combined 2023 TAM of $122 billion,” Ken Xie, Founder, chairman and chief executive officer at Fortinet, said in the company’s earnings release.

For its fiscal third quarter, Fortinet expects adjusted earnings of 35 to 37 cents per share on revenue of $1.315 billion to $1.375 billion. Analysts were expecting 36 cents and $1.3 billion. For the full year, the company expects earnings per share of $1.49 to $1.53 on revenue of $5.35 billion to $5.45 billion versus an expected $1.46 and $5.47 billion.

The misses on quarterly revenue and full-year revenue outlook sent investors to the exits as Fortinet’s share price plunged by over 16% in late trading.

For its fiscal second quarter, Cloudflare, some of whose products are aimed at improving cybersecurity, fared much better. It reported adjusted earnings of 10 cents, up from break even in the same quarter of last year, on revenue of $308.5 million, up 32% year-over-year. Analysts were expecting earnings per share of seven cents on revenue of $304.57 million.

“Our innovation engine remains in high gear and by our estimates, Cloudflare is the most commonly used cloud provider across leading AI startups,” co-founder and CEO Matthew Prince said in the company’s earnings release. “In the second quarter alone, we shared 10 major announcements and features to extend Cloudflare Workers as the preeminent development platform built for the age of AI.”

For the third quarter, Cloudflare said it expects earnings per share of 10 cents on revenue of $331 million to $333 million. Its shares rose nearly 8% in late trading.

Earlier in the day, SolarWinds saw its shares close up almost 17% after delivering its quarterly earnings report. In its second quarter, SolarWinds reported adjusted earnings per share of 21 cents, four cents higher than expected by analysts, on revenue of $185 million versus an expected $179 million.

“For the second quarter, we once again delivered total revenue and adjusted EBITDA results above the high end of our guidance, highlighting another quarter of 5% year-over-year total revenue growth and strong year-over-year adjusted EBITDA growth of 18%,” Sudhakar Ramakrishna, president and CEO of SolarWinds, said in the company’s earning release.

For the quarter ahead, SolarWinds expects earnings per share of 17 to 19 cents on revenue of $182 million to $186 million. Analysts had expected 18 cents and $182.4 million. For the full year, the company expects earnings per share of 76 to 79 cents on revenue of $740 million to $748 million, versus an expected 73 cents and $734.7 million.

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