Fortinet, Inc. (NASDAQ:FTNT) Q4 2022 Earnings Call Transcript

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Keith Jensen: Yes. I think just building Ken’s comment one of the notes that we do track tenure. We talked about it last quarter. Tenure would be people that have been here for, say, people have been here more than six months. And I commented last quarter, the tenure was up, I think, eight points. It’s actually moved back to historical norms now. And tenure is kind of a key component of productivity as we see — as we go forward.

Adam Borg: Got it. And maybe just a quick follow-up just on the FortiGate and entry mid and high. It’s nice to see really strong midrange growth is interesting at the high end leased by my math was the lowest mix since 2017. Just curious if anything to comment there. Thanks so much.

Ken Xie: That sometimes depend on certain like products or backlog. I think that’s probably the average still pretty similar. We don’t see much, but sometimes from quarter-to-quarter, it may change a little bit. But I have to say the total mix is still pretty much the same.

Keith Jensen: Yes. I think that’s one of the challenges you have in the current environment and the supply chain was really doing funny things, if you will, into delivery, and we don’t give you a lot of insights to orders that we were taking in, but we provide billings numbers, you get some distortion there just simply based upon what’s available. Specifically, we saw a significant amount of availability of the 100F products, if you will, which are a midrange product. And you’re seeing that availability came in the fourth quarter, and it shifted that mix in the way you just described it.

Operator: Thank you. One moment please. Our next question comes from the line of Tal Liani of Bank of America. Your line is open.

Tal Liani: Hello. Thank you. There’s going to be one day call that no one is going to butcher my name, and I’m going to be very happy. But I wanted to ask you two things. First of all, could you provide a backlog for 4Q or anything about it? I’m trying to calculate the bookings for the year and what happens to bookings? And any color on backlog would be great. And the second question, a few people asked you about the services growth for next year. I want to ask you about the product growth. The product growth is going from 42% to 15%, if my math is right, from last year to next year to this year. And on the other hand, your commentary is positive. It’s — there’s more activity, there’s more product sales. So can you take us through the dynamics of product growth and also the connection, the relationship between services and products. Thanks.

Keith Jensen: Yes, I’ll start with the last one first, if you will. I think that I think we are very excited about the opportunities in front of us in terms of how the company is executing. But we are certainly also very cognizant of the unknown of the macro environment. And I think there’s just an opportunity here in terms of how we guide for the full-year to really bake in concerns around the macro and how it may manifest in the coming months — coming quarters. So I think you’re seeing that, and I kind of made a comment earlier that historically, it’s been tough for me to be somewhat cautious on service revenue because it’s so visible. We’re looking at short-term deferred revenue and the conservatism oftentimes ends up in product revenue. I think there’s still an element of that in this conversation.

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