Fortinet Inc
NASDAQ:FTNT
| US |
|
Fubotv Inc
NYSE:FUBO
|
Media
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
| US |
|
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
| CN |
|
NIO Inc
NYSE:NIO
|
Automobiles
|
| US |
|
Fluor Corp
NYSE:FLR
|
Construction
|
| US |
|
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
| US |
|
TopBuild Corp
NYSE:BLD
|
Consumer products
|
| US |
|
Abbott Laboratories
NYSE:ABT
|
Health Care
|
| US |
|
Chevron Corp
NYSE:CVX
|
Energy
|
| US |
|
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
| US |
|
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
| US |
|
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
| US |
|
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
| US |
|
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
51.32
99.15
|
| Price Target |
|
We'll email you a reminder when the closing price reaches USD.
Choose the stock you wish to monitor with a price alert.
|
|
Fubotv Inc
NYSE:FUBO
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
C
|
C3.ai Inc
NYSE:AI
|
US |
|
|
Uber Technologies Inc
NYSE:UBER
|
US |
|
|
NIO Inc
NYSE:NIO
|
CN |
|
|
Fluor Corp
NYSE:FLR
|
US |
|
|
Jacobs Engineering Group Inc
NYSE:J
|
US |
|
|
TopBuild Corp
NYSE:BLD
|
US |
|
|
Abbott Laboratories
NYSE:ABT
|
US |
|
|
Chevron Corp
NYSE:CVX
|
US |
|
|
Occidental Petroleum Corp
NYSE:OXY
|
US |
|
|
Matrix Service Co
NASDAQ:MTRX
|
US |
|
|
Automatic Data Processing Inc
NASDAQ:ADP
|
US |
|
|
Qualcomm Inc
NASDAQ:QCOM
|
US |
|
|
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Fortinet Inc
You don't have any saved screeners yet
Good day and thank you for standing by. Welcome to Fortinet, third quarter 2021 earnings announcement conference call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.
If you require any further assistance, please. Press star 0. I would now like to hand the conference over to your first speaker. For today. Mr. Peter Zarkowski, Vice President of Investor Relations. Please go ahead, sir.
Thank you. Good afternoon, everyone. This is Mr. Peter Zarkowski, Vice President of Investor Relations to Fortinet. I'm pleased to welcome everyone to our call to discuss Fortinet's financial results for the third quarter of 2021. Speakers on today's call are Ken Xie Fortinet's Founder, Chairman, and CEO, and Keith Jensen, our Chief Financial Officer.
Is a live call that will be available for replay via webcast on our Investor Relations website. Ken will we get our call today, providing a high level perspective of our business. Keith will then follow with the financial and operating results, for the third quarter before providing guidance for the fourth quarter and updating the full year.
We'll then open the call for questions. During the Q&A session, we ask that you please keep your questions brief and limit yourself to 1 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 Form 10-Q. For more information, while 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 our references to financial metrics that we make today on today's call are non-GAAP, unless stated otherwise. Our GAAP results and GAAP to non-GAAP reconciliations is located in our earnings press release and in the presentation that accompany today's remarks, both of which are posted on the Investor Relations website. Lastly, all references to growth are on a year-over-year basis, unless noted otherwise. I will now turn the call over to Ken.
And thank you to everyone for joining today's call to review our outstanding third quarter 2020 web result. Billings increased 42% to $164 million, exceeding our $1 billion in quarter $2 billion for the first time in Fortinet History. Global to $2000 billion growth accelerates to over 50% total revenue growth 33% to $857 million with product revenue up 51%, our highest quarterly product revenue growth since going public in November 2009, with very strong business momentum, which remains focused on growth.
According to Gartner, the negro parameter is fragmented with many security team and the tools are producing cellos. And integration best operated solution, only add to the complexity. To address this challenge, Gartner is predicting that by 2024 optimizations that adopt our separate security mesh architecture will reduce the financial impact, of the individual security incident by an average of 90%.
In a recent report, Gartner called out, Fortinet Security Fabric as a platform that offers cybersecurity mash architecture approach. Fortinet is helping customers softening the issue of capacity through our security driven networking as security fabric platform, our approach for [Indiscernible] for the basic offers factor 10 ton most security computing power. These results in tightly integrated functionality with better performance, lower cost, and power consumption compared to agenda CPU.
Or again, late the run-up it 40 Fabry solution like email lab and end-point together with FortiGate, firewall, offers much broader protection. While you integration at a better automation than other competitive solutions. As solutions continue to consolidate towards a powerful approach. And as [Indiscernible] secured expand to local ad a wide area network to the walk for any aware environment and to the cloud.
Fortinet is strongly positioned to significantly capture market share of our projected total addressable market of more than a $174 billion by 2025. We are confident that this trend together with our -- relented this focused on organic innovation will drive better-than-industry average long-term growth for Fortinet. Walk from anywhere is here to stay.
The COVID-19 pandemic has greatly expanded the walk for anywhere [Indiscernible]. According to Gardner, authorizations are facing a hybrid future with 75% of workers seeing their expectation for working flexibility has increased. Today, Fortinet announcement industry most completes solution to enable organization to secure and connect warfare anywhere.
Our unions fly Fortinet, broad portfolio of Aviva Trust, endpoint, and network security solution within the Fortinet security fabric. Fortinet delivers security that follows user wager on the load and home are in the office to provide enterprise grade protection and the productivity. The 2021 Gartner magic quadrant for 1AG infrastructure address announced.
Fortinet was once again named the leader, placed -- highest ability to execute at a rent number 1 for Gray mode, Wolchok in critical capability. The leadership SD-WAN, Fortinet and of our rising recently are not the expansion of their wireless and global outfront with Fortinet secure SD-WAN. The solution is designed to provide enterprise on the business market customer. Was a converged networking security solution box to secure and connect war for nowhere.
We continue to see momentum and adoption of our secure SD-WAN when 5G board SDB branch and the cloud delivered SASE solution among the worlds largest of its providers. These service providers, including AT&T, which is Ted accounting kind of foreign IKA and others. We plan to announce in the coming months before turning the call over to Keith, I would like to thank our employees, customers, and farmers worldwide for their continued support on our work.
Thank you, Ken. Let's start the more detailed Q3 discussion with revenue and the drivers for our record-setting product revenue growth. Clearly, demand is strong. Total revenue of $867 million was up 33% driven by industry-leading product revenue growth of 51%. Looking closer at the 51% product revenue growth, our highest quarterly product growth rate in 12 years as a public Company, we can point to 3 drivers.
First, the convergence of security and networking, or what we call security driven networking. Second, strong customer demand for vendor consolidation on platforms. And third, a heightened awareness of today's elevated threat landscape across a broader set of entities. Fortinet is proud to be an innovative leader in security driven networking.
With a convergence of security and networking functionality incorporated into our broad integrated and automated security fabric platform. Our security driven networking investments in Wi-Fi switching, LAN, datacenter, Cloud 5G, and enabled us to provide integrated security at networking speeds from the datacenter to end-points and to the cloud. And with our secure SD-WAN solution, security at the edges.
Today we announced a unified solution enabling organizations to secure and connect work from anywhere. The unifying our zero-trust endpoint and network security solutions. We can deliver enterprise-grade security services and threat intelligence that seamlessly follows users on the road at home and in the office.
That's for consolidation. Customers are increasingly focused on vendor consolidation, automation, and platform strategies to provide a broad, integrated, and single platform approach the security, that effectively protect from the wide range of an attack vec -- attack vectors. Our security fabric platform, provides a broad range of security products, integrated on a single operating system.
Gartner recently called out Fortinet security fabric as a platform that provides a cybersecurity mesh architecture approach, or CSMA. The cornerstone of foreign as CSMA may approach is our AC driven Florida gates, which provide on average 5 to 10 times more computing power than competitors, firewalls running on common CPU's.
They're greater computing power allows our software engineers to embed additional security functionality and integration into the operating system, enhancing our price for performance advantage. The integration extends across our suite of security fabric solutions. It consists of the complete range of form factors and delivery methods, including physical and virtual appliances, Cloud, SaaS, and perpetual software.
Those hosted in non-hosted solution. And lastly, turning to awareness, the explosion of ransomware attacks has led to a greater awareness of the need for cybersecurity technologies. According to latest global threat landscape report published by our FortiGate -- FortiGate labs. The number of unique ramps OEM -ready taxes per week increased more than ten times from July of 2020 to June of 2021.
The increase in the taxes across entities of all sizes, geographies, and industries. These 3 factors, the convergence of security and networking, the adoption of cybersecurity mash architecture, and a greater awareness with threat landscape drove record-setting product revenue growth contribute to market share gains for Fortinet.
The dramatic product revenue growth was broad-based, with FortiGate and Non-FortiGate, both posting product revenue growth rates of approximately 50%. While tilting our current revenue mix 450 basis points from higher margin services revenue to product revenue. FortiGate product revenues were driven by entry-level in high-end FortiGate product revenue growth of 60% and 57% respectively.
Non-FortiGate product revenue growth was driven by several platform products including mail, sandbox, SIM, switches, and virtual firewalls. Rounding out our revenues, we saw service revenue of $530 million up 24%. Support and related services revenue was up 26% to $243 million while security subscription services revenue was up 22% to $287 million. Turning to revenue by Geo, that summarize on Slide 5, revenue in EMEA increased 33%.
In the Americas revenue increased 29%. And APAC posted revenue growth of 43%. Moving to billings., 40 billings crossed the $1 billion threshold, for the first time in our history. At $1 billion, $64 million billings were up 42%, as enterprises responded to the expanding threat landscape. Favoring costs were performance leaders, in integrated platform or CSMA strategies.
This is especially evident across the enterprise segments, for example, in the large enterprise sector, global 2,000 billings were up 52%, with growth accelerating over the last 3 consecutive quarters. And for the second consecutive quarter, we added over 6000 new logos across all customer segments. FortiGate billings were up 39% and accounted for 70% of total billings. As shown on Slide 6, entry level on high-end FortiGate posted very strong billings growth. Non FortiGate billings were up 49%.
Driving a 1-point billings mix shift to Non-FortiGate. The top ten solutions accounted for 68% of Non-FortiGate billings and we're up 48%. The number of deals over $1 million increased over 70% to 83 deals and saw secure SD-WAN deals more than doubled to 19. Average contract term increased three months year-over-year, and one-month, quarter-over-quarter to 29 months.
The increase in contract term was driven by the significant increase in G2000 and other large enterprise deals. SD-WAN billings were up 52%, outpacing the Company's billings growth and accounted for approximately 14% of total billings to continue to receive industry accolades. For the second consecutive year, Fortinet was named a leader in the Gartner Magic Quadrant for WAN Edge infrastructure and positioned number one for ability to execute.
For critical capabilities Fortinet SD-WAN ranked first in the small ranch WAN, security sensitive and remote work use cases. And consistent with the elevated threat environment and the breadth of ransomware and other attacks, OT billings were up 77% Moving to worldwide billings by industry verticals. Among the top five verticals, worldwide government grab the largest share with a mix of 17% and saw billings growth of 22%.
We've made investments to expand our presence and engagement with the government sector. For example, in the U.S., where we recently added retired Forestar Adam Elster [Indiscernible] to our Board of Directors. And yesterday for net federal announced Department of Defense certification approval for an additional 26 security fabric solutions.
Internationally, we're set to over open for EPS federal government integration Innovation Center in Australia before the end of the year. Utilities, manufacturing, transportation, and construction, and other verticals that have not consistently been in our top 5, combined for billings growth of 68%.
We believe the growth of these verticals is another indicator of the broadening nature of the threat landscape, and is driving security investments in industries that may have shown less affluent security budgets, and lower internal labor resource levels. On August 31st, Fortinet acquired a controlling stake in Alexa networks. Are Japan base networking Company for approximately $64 million.
Alexa provides high-performance network switches and routers in their local market. The investment increases our total addressable market, and reflects our leadership on the convergence of networking and security. Moving back to the Income statement, product gross margin declined 220 basis points to 60.7% reflecting the consolidation of [Indiscernible] results and a change in our product mix.
Product cost increases associated with supply chain constraints were largely offset by our pricing actions. Services gross margins decreased 150 basis points to 86.6% due to Alexa and costs associated with expansion of our datacenter footprint. The 25.8% operating margin was 30 basis points above the top end of our guidance.
Despite pressure from lower gross margins and higher marketing expenses, primarily from the foreign net championship, [Indiscernible], or event. Headcount increased 20% to 9,700, moving to the same, the cash flow summarize on Slide 78, free cash flow was $330 million representing a margin of 38%. Free cash flow benefited from strong billings, growth in good billings, linearity. On a year-to-date basis, free cash flow margin was 41.5%.
We repurchased approximately 370,000 shares of our common stock for a total cost of 109 million at an average price per share of $2.94. The board increased the share repurchase authorization by 1.25 billion and extended the expiration date of February 2023. The remaining repurchase authorization is approximately $2 billion. We ended the quarter with total cash and investments of $3.4 billion.
Inventory turns increased to 2.9 times from 2.7 times in the second -- from the second quarter 2021. Reflecting strong product sales in the quarter, answers and some supply chain pressure. DSO's at 63 days returned to pre -pandemic levels. Capital expenditures for the quarter were $69 million, including a payment for the new campus building of $13 million. As we noted in our last earnings call, we've pivoted our capital expenditures strategy to include building out our facilities and operations infrastructure to support our accelerating growth.
We estimate fourth quarter capital expenditures to between $170 and $190 million investments in our future facilities and operations infrastructure account for the sequential increase in CapEx. Before providing guidance, I'd like to comment on the supply chain, the consumer widely publicized, that the rapidly changing macroeconomic environment is causing disruption in global supply chains for companies of all sizes, and industries.
We expect the worldwide supply chain constraints will present evolving challenges in the fourth quarter, and into 2022. The supply chain issues have proven to be extremely dynamic. And like to pause here to acknowledge and thank each member of our operations team, for their truly outstanding performance.
With regards to pricing, we believe we entered this space with a harder and reputation of being able to provide customers excellent price for performance or value. We believe we can leverage this reputation to largely offset our increased cost. We believe our pricing actions have been met with understanding by our customers, as evidenced by our Q3 results, and strong pipeline growth. We view the current situation as our supply challenge, not to demand challenge.
Now I'd like to review our outlook for the fourth quarter summarized on Slide nine, which is subject to disclaimers regarding forward-looking information that Peter provided at the beginning of the call. The following guidance reflects our best efforts estimate the supply chain impact. For the fourth quarter, we expect billings in the range of 1 billion to 165 million to one billion, 215 million.
Revenue in the range of 940 million to 970 million. Non-GAAP gross margin of 75 to 76%. Non-GAAP operating margin of 27 to 28%, which includes an estimated 200 basis point headwind from acquisitions, foreign exchange, and increased travel and marketing costs. Non-GAAP earnings-per-share were $1.10 to $1.15, which assumes a share count of between 168 and 170 million. We expect a non-GAAP tax rate of 21%.
Based on our very strong third quarter performance, and the upside I just provided for the fourth-quarter expectations, we are once again raising our 2021 guidance. We expect billings in the range of $4.40 billion to $4.90 billion, which at the midpoint represents growth of approximate 31.5%. Revenue in the range of $3.320 billion to $3.350 billion, which at the midpoint represents growth of 28.5%.
Total service revenue in the range of $2.80 billion to $2.90 billion, which represents growth of 24% and applies full-year product revenue growth at 36%. Non-GAAP gross margin of 76.5% to 77.5%, non-GAAP operating margin of 25.5% to 26.5%. Non-GAAP earnings per share of $3.85 to $3.85. This assumes a share count of between 167 and 169 million.
We expect our Non-GAAP tax rate to be 21% We expect cash taxes to be approximately 130 million, which includes a $47 million tax payment made in the fourth quarter. Along with Ken, I'd like to thank our partners, our customers, and all members of the Fortinet team for all their hard work, execution and outstanding success. I will now hand the call back over to Peter to begin the Q&A.
As a reminder, during the Q&A session, we ask that you please limit yourself to one question to allow others to participate. Eli (ph), please open up the call for Q&A.
Thank you. [Operator Instructions]. For your first question, we have Brian Essex from Goldman Sachs. Your line is now open.
Great. Good afternoon. And thank you for taking the question and congrats on some really nice results this quarter. I guess, Keith, you spent some extra time talking about the supply chain and it's certainly the most frequent question I've gotten from investors, particularly over the past three weeks.
So could you maybe help us understand, what kind of headwind you're quantifying or accounting for in your 4Q guide? Where you might see risks in the supply chain? And then, what you might be seeing from peers, particularly where you may be benefiting from having supply where your peers may not have product?
Thanks Brian and I don't know that anybody knows all the answers to the questions that you articulated at all. You thought I'll give you some color as well. I think we saw a little bit of supply chain pressure in the second -- in the third quarters I alluded to, but obviously the number's nothing that was terribly noteworthy.
I do think the guidance that we've given for the fourth quarter is appropriately conservative, if you will, in terms of what we see for supply chain or what we would call backlog in the fourth quarter. I think we feel good about the guidance that we've given. I think the -- if you look at the general tone and what we're hearing from our operations team. I think there is sometime in the third quarter where every day was very dynamic with them.
With people calling and them having to scramble about component matters and contract manufacturing commitments or what have you. I'm hearing less about that at this point, that's probably very early on. I would also offer that, the backlog or supply chain first appears for us in some of the fabric products, the Non-FortiGate. And I think that'll continue on a little bit into the fourth quarter.
And probably also gets -- before it gets to some extent in the fourth quarter as well. Getting out to 2022, I think everybody is kind of in the same boat and trying to understand when we're actually going to see something to tell you real market improvement -- mark improvement. And I think we'll probably hold back commenting on that for the next several months until we get closer providing guidance for that, for the next year.
Brian is a 10 [Indiscernible] I feel we are little bit better position compare to competitor. First, it's why we have the quantity much louder than our competitor. We are probably like a 3x compared to the fiscal on a unit shipment, maybe [Indiscernible] pulled out of some other, which gave us better negotiation power be similar to supply, and also will manage all these more directly compared our competitor [Indiscernible] some sort of party.
that's given us better visibility and also can act quicker earlier. Second, we have quite a broad product line. Bolstering the FortiGate and also NAMA FortiGate is an easier for our customer to go to the next line of products has a similar performance and then all running the FortiOS in FortiOS. So it's a more easy to use in some different product to sell better some of their product shortage.
And also, we have a great team -- operation side. And the same time, we have a culture more than less than a long term both on their inventories and market sales compared to our competitor. To me, some even [Indiscernible] [Indiscernible] 5, 10, 15 years ago, we tend to keep some more trade to me customer urgent needs. So that's actually been for that supply chain issue.
Great. Thank you very much. On our Peter's request for just one question and step back in the queue.
Next we have Tal Liani from Bank of America. Your line is now open.
Hey guys, you're killing me with this one question thing. I want to focus on the most important part, which is the growth acceleration. Your revenue -- your product revenue growth, went from 25% to 41% to 51% in the last 3 quarters. And your billing growth, went from 14% to 35% to 42%, it's just a major acceleration.
And the question is, can you identify the key areas? I know that a lot of areas are growing, but when you look at material areas, meaning that the most -- the highest contribution to the growth acceleration. What are the key areas? Can you share with us the key areas, where you see the highest growth in terms of dollars? And can you also give us an update on SD-WAN specifically? Thanks.
As you can see, both of FortiGate and also Non-FortiGate, all revenue growth like, 50%. FortiGate is small really to -- because like, a whether the internal SEC communications to protect all these read somewhere or go to the when I stick us, you went.
And also the Non-FortiGate more tied to the story, the fabric Fortinet security fabric, which is also Gartner sat in promoting the core cybersecurity mash architecture, which can reduce the financial costs of our single event by legacy, 90%. I think that this falls contributor for the gross, like a key said. And also some vendor consolidation, we see some smaller vendors starting got weaker and weaker. So we do see some market share gain here also.
Okay? And when you look at 2022 and I know you don't provide guidance, but when you look forward, do you see the same drivers continuing to support the growth acceleration or how do you deal with these high targets next year?
We do see this trend it's not slowed down. Well last for probably a few years. What are we close security driven network in our secure fabric, which really we're helping the enterprise or service provider to look at better security and the customer obviously. So far be back see anything slowed down. We feel we're well positioned to keeping gaining market share.
I would just echo what Ken said Tal for -- but I think the threat landscape as a hot topic of conversation in all quarters of other world have seen right now. And it doesn't seem like that's going to abate anytime soon. I think the needs -- what can and team have built here with the body security and network -- networking speeds is critical.
But I think also this platform of our gardeners now call it, calling the mesh architecture -- cybersecurity mesh architecture, I think consistent with partners all the reports about, the percentage of companies we are looking for consolidation, I think Ken's commented on that, and how that's going to continue to increase it. It's certainly seemed to those tailwinds, are poised to continue to exist as we get into 2022
Great, thanks.
Our next we have Shaul Eyal from Cowen. Your line is now open.
Thank you. Congrats on the performance and guidance, guys. Keith, that Federal vertical had a good performance. Was it just typical of third quarter of government seasonality? Or do you see that sustainable -- as sustainable buoying forward, given your recent investments, so within this vertical?
Keep in mind for us, the government is a worldwide name when we talk about it. So it includes some U.S. Federal, international governments, also state and local governments, etc. It has been a very strong vertical of ours for well over a year, if not 2 years now. And I certainly don't see any reason that just on that basis that it was slowed down.
And I think if you overlay that with investments that, Ken and team are now making, particularly as it relates to the U.S. Federal team. I think there's some opportunities for us is to explore and exploit hopefully as we move forward.
Thanks.
Our next we have Michael Turits from KeyBanc. Your line is now open.
Hey, guys, some drill down on the FortiGate side and really understand. The purchasing has taken place and for what is good to see, I would think that we are modernizing datacenters, or is datacenter expansion? Is it displacements? And again, surprising perhaps considering the move to Cloud. So just drill down on the physical Bahram slashed quarter gate side.
I think what we're -- and I hate to give compliments to my peers. But I think what we're really seeing here is really starting execution from the sales team. I think we came into this conversation and feeling that we had a very strong product suite. But I think the sales team has done a stellar job. And we talked to them about the same question you just asked me. Whereas if coming from?
I can hear and then the confidence and when it comes to Display's website. There's certainly no competitor that, they're afraid off. I can -- I can hear them articulate back the platform strategy, the land and the expand strategy. I can see them using some of the tools and products and technologies that, we've invested in -- invested in them.
And they're leveraging them, I think very successfully. So I -- going with a question going back, I think that, Tal have asked about, and we used this term before, a rising tide lifting all boats. And I think, we saw that in the quarter. There wasn't a weak geography, there wasn't a weak -- a weak product sweep, and I think everybody performed very strongly.
Yes. Keith is the global to solving, growing over 58% and also the last [Indiscernible], is [Indiscernible] made like an active year before. In some peak end up price in some service provider set in paying off.
Yes, I think it's the same question, so hopefully not too, but I'm just trying to figure out, of course, execution and competition doing well that way. But where are we in terms of people just buying stuff to put in datacenter is when we're really in a cloud mode here. Is it because of a refresh, or why we've seen that investment?
I think it's all claims to all like the long-term ASIC strategy which add a lot of performance and the more function, and the same time cost lower, and then low [Indiscernible] also. That's where the security setting expands inside a data center inside Company, internal network, and also the wan side.
I see 1 5G. We also see a lot of driving for that end goal. So it's really selling expense for the whole infrastructures instead are traditionally just security Internet border. So that's how the much people total addressable market sometime because secure driven networking. But it's really a most suspended market and has smart strong security.
Thanks guys.
Next we have Sterling Auty from JP Morgan. Your line is now open.
Yes. Thanks. Hi guys. The ongoing asked my 1 question is an extension of what Michael was just talking about. I'm curious as you look at the growth in the quarter, even if it's qualitative, can you help characterize for us how much of that growth is coming from actual displacement of solutions, both traditional cybersecurity and networking, versus how much of that growth is coming from existing customers, buying additional expansion. An additional product is just a build-out the handle their growth needs.
I think the metric I would give is 6,000 new logos. I think that, I'm going to go back and say, I mean, the [Indiscernible] the execution was very strong across-the-board. Did we -- was there penetration, greater penetration in our installed base of customers? Absolutely. No doubt about it.
But at the same time, that's two quarters back-to-back now that we've added 6,000 new logos, and I know some of those are small enterprises. But we're getting the at-bats that we've always coveted. And I think coming with more at-bats, I think you were seeing stronger execution as well.
Also, the existing customers keep expanding [Indiscernible]. Something like security plus structure approach, like adding to one side, I see 1 5G and also expand with the internal segmentation and Wi - Fi security data center security. So that's what I can boast about. I do see probably maybe more come from the cost keeping expanding their security infrastructure.
Understood. Thank you.
Next we have Rob Owens from Piper Sandler. Your line is now open.
Yeah. Thanks for taking my question. I guess I'll pivot a little bit from Sterling and ask about G2K specifically, and what is driving the strength in G2K billings. Is that products related, is it just better distribution relationships that are getting you into these accounts and who do you think share is coming from in this market? Thanks.
I think the -- I would give a general comment in terms of where -- who is the market share gainers and who are the market share donors? I don't think there'll be any surprises. I've actually -- the mentioned names in terms of, who I thought those were. In terms of distribution, I think when you get in, particularly in the U.S. market with a large enterprise focused distributors, you've got a -- as a Company, you've got to invest in time and bring opportunities to them and demonstrate that, you have a superior product, a superior offering.
And I think that, the team has done the heavy lifting on that. And I do believe that, we are getting more momentum, if you will, from those large U.S. distributors that, maybe we did not have previously. So I think there's some of that. And then I think we've continued to invest in both the sales and the marketing. We knew all along for several years now that, we needed to improve our coverage in terms of [Indiscernible] accounts that we're assigned to wraps.
And the people that we're bringing in from outside and that, maybe had more of an enterprise experience unless of a channel experience, etc. So I do think that all those things have combined and are demonstrating the success, as you pointed out, G2000 growth at over 52% and accelerated for the last three quarters.
Thank you.
All right. Now we have Hamza Fodderwala from Morgan Stanley. Your line is now open.
Hey guys, thanks for taking my question. I'm going to keep it to one question. But just on the OT side, you talked about that growing 77% this quarter. I think those are the first-time you mentioned that product specifically. Just curious, can you give us any rough sense of how material that's becoming to your overall billings and what's been driving that in more recent quarters?
I think it's not as big as SD-WAN but growing faster. But also, I don't think we're -- I think that it's reached a point, if you will in terms of size that we're comfortable and we think its worthwhile making sure that we share with people outside the Company with those growth levels. If you combine SD-WAN and an OT together as a percentage of billings, you're going to get to something. I think that's over 20% of our total billings.
Thank you.
Next we have Adam Morgens from Stifel. Your line is now open.
Hey guys and thanks so much for taking the question. Maybe just for Ken, so back at September, you guys signed a partnership with Linksys around securing work from home environments and segmenting corporate and personal networks. And I know one of your competitors also announced a similar idea.
So how should we think about the idea of securing home networks and effectively the whole becoming extension of a branch office of one and the opportunity to do that as we live in this work from anywhere world going forward? Thanks so much.
It's a new market. It has a lot of potential supporting work from anywhere. That's where we partnered with LNG sales and which has down in home networking area for quite a while. And we do believe it's a -- eventually a lot of reasons if it's all these IOT are modest in connect online.
And also a lot of our workforce and school from [Indiscernible] is kind of since there at all when neither Security, which we combined with the network security while endpoint security and also the clouds amount SASE. So we do feel it's a big long-term potential. But as it's a not quite. I mean that -- the business actually ramp up quickly, but it's an eventually will contribute more revenue for the Company.
Great, thanks so much.
Thank you.
And next we have Jonathan Ho from William Blair. Your line is now open.
Hi, good afternoon. Congrats on the strong results. Just wanted to, I guess, understand a little bit better the dynamics around the price increases to your base. Can you give us a sense of the magnitude or impact of the quarter from those increases? And is there a potential for that to stick even beyond some of these supply chain challenges? Thank you.
Yes. We work carefully increase the price based on how cost increase, which also supporting by some our partner and at the same time. Because we have much better performance price ratio, and also more function, especially on the 40-k side. So we do feel we have more room to address by some of the price, and still, customers do like the product. So soon probably we do some price increase. And we'll just offset the cost increase. And we'll get margin back online.
I would add to that, Jonathan, the -- one of the metrics that we look at in the third quarter, which is our ability to hold the line of the price increases, which were largely effective on August 1st. I'd say largely because you have to give notice to your channel partners, which is appropriate. And you can imagine them taking certain actions to get orders in the 1st month of the quarter, if you will.
So it gets a little bit distorted that way. But we do look at our ASPs and wanting to make sure and are discounting that, we're not giving back that price increase, if you will. And overall, I think the headline is that, we think we were on the direct product line. I think it was secretive to the margin in the quarter.
And I emphasize the direct, because as volatile as it is, predicting things like expedite fees and sometimes, freight prayed as well, can come into that line. So I think overall, when you factor in direct and indirect, we're probably in a wash for the quarter.
Great. Thank you.
Next we have a Gray Powell from BTIG your line is now open.
Great, thanks for taking the question and congratulations on the good numbers. So yeah, within your Non-FortiGate billings, can you roughly give us a sense as to how much is related to appliances versus software and Cloud? And then how should we think about supply chain issues potentially impacting Non-FortiGate in Q4?
Yeah. I think the Non-FortiGate mix is something on the order of about -- we talked about this before, something we were at 30% to 40% of that is Cloud or software. And the remainder will be a hardware form factor. As I mentioned in the call, I think the first place that we saw supply chain pressure in this third quarter, was in non-FortiGate, more specifically around switches and access points.
Got it. That's helpful. Thanks.
Next we have Andrew Niwinski from Wells Fargo. Your line is open.
Great. Thank you and congrats on a great quarter. I want to ask about the high-end, that was certainly better than expected. I think over 37% of your FortiGate sales, which looks like it was the highest level of spend in at least the last two years. Can you talk about the drivers of the high-end? And whether the 5G rollouts in your leadership position in the carrier market might be contributing to that?
Yeah. The big enterprise, the Global 2000 that contributes some high-end growth. And also on the product we have fresh [Indiscernible] And I think in the last 1 to 2 years, we also refresh a higher-end. You've seen the latest ASIC for MPS -7, which has have 5 x better performances and more function compared with the previous MP6, which I see the high-end we probably were scratched like, maybe 80% of the [Indiscernible] is already. So that's also we said in benefit some of these refresh we made in the last 1 to 2 years.
No contribution from the 5G carrier-class customers there? There's more on the enterprise?
There's some contribution from SD-WAN. But it's the 5G steering the ramp up stage. I don't see much, but I do see the huge potential.
Super. Thank you.
Thank you.
And next we have Irvin Liu from Evercore ISI. Your line is now open.
Hi, thanks for the question. This question is for either Ken or Keith. You have the opportunity to meet with several customers and partners along with new prospects that, you’re first of its kind Security Summit, that's the place that you're sponsored PGA Fortinet championship event. Can you just talk about whether you're seeing -- what you're seeing from a customer traction perspective, post the event. And perhaps if the event had led to a notable uptick in visibility and mindshare among customers.
I think the head of marketing asked that question. But it's a good question.
It's probably one of the biggest marketing investments we have been made, but definitely see Barb worse except for advance will result. A lot of customer and a lot of pun that, really appreciate all these -- fully that champing PGA had a beer.
And also we using it as a platform to bring different customer upon altogether, to share, communicate their experience and also to the training education. And so we do see this is already helping a lot of the marketing sales [Indiscernible] we have and also generate a lot of [Indiscernible] put in this way. Is more successful event.
I would come over the topic and completely echo, and what Ken had to say. I've just -- I'm shocked at how enthusiastic I am about how that event came out. Whether we look at, what we call whitespace names that, we got from, say SMP 500. The percentage of attendees that were non-customers, and it was sit with us on one-to-one sessions and hear more about our story and the household names that were there, it was fantastic.
I think the branding with the marketing team pulled together with that, together with Silverado Country Club, was extremely successful. And I think also, it goes back to some of the comments we made earlier in the conversation. I think it was -- it really struck Fortinet at the right time in terms of its call its maturity, right? I think that the team here was, really in a good position to execute against that.
I was in a customer meeting yesterday here in Sunnyvale, with a very large Company that come to the event. And so it was a follow-up. And there have been other very large companies that have come to our ABC events here in Sunnyvale. And just in the first month and a half after the event, I'm just really impressed with what the guys did. Guys and ladies between.
Got it. Thanks for the color.
Yeah
[Operator Instructions] Next we have Keith Bachman from BMO. Your line is now open.
Thank you very much. I was -- wanted to direct this towards Keith. Keith, as you think about the billings guide, what you're suggesting EBITDA high-end, the billings' sequential growth would be about 13% in the past 2 years, you've grown billing sequentially, about 28%. So obviously a little less on the guide. I'm just wondering if you could just give us some color or thoughts around that.
And in particular, is that a reflection of -- was there any kind of pull in that you think about on the billings, were customers concerned about not getting product? And/or is it reflecting some of the concerns you previously mentioned about are we going to have enough of the supply chain availability or product availability I should say. And therefore, we might need to tamp down a little bit in Q4. And then I have a follow-up if I could, because Peter told me I'm allowed to ask a follow-up.
Again. Look, I think what you're seeing there is supply chain. And as I said earlier in the conversation, that I think they -- we've been appropriately conservative, I hope, in terms of how we guided to it. To unpack that, just a little bit, we do with our sales team, and we manage things on a bookings basis with them. And then we put that up against what we have the ability to ship.
If I look at just the bookings number and we had a long internal conversation about whether or not that's a metric that we should provide in this time and decided not to. But if we look at just the bookings number, I would say that, it's a very strong indicator that the business is extremely healthy, if you will.
In terms of customer buying behavior there's always somebody getting in line early, if you will. That they have longer-term deployment or what have you. That's not new and maybe a little bit of it in the third quarter, no deal is over $10 million or they are the largest deal with probably seven or eight or something like that in the quarter.
We have seen in the fourth-quarter things where customers I'd say they are getting line orders. They've got deployments where our plans for deploying in 2022. And they want to make sure that, they're trying to time, when they are actually going to need the product and when the product is going to be available. So I have seen early in the quarter, a few companies exhibiting that behavior.
We're hearing that a little bit from the channel, not the lead times, because they're getting out, customers are ordering early in more. But it sounds like what you're saying, essentially you are concerned about maybe the billings number reflects some -- you might not be able to make all shipment demand and so that's reflected in the quarter from -- I hope I'm not putting words in your mouth.
No, absolutely. I think that would be a very prudent thing to say, with the supply train environment that we're in, I'm not just going to take the -- I can't just take the absolute booking number to shift, but I think there's been a fair amount of internal work around that if you will, now, on the other side, it does give us more predict more predictability as we come into 2022 of this behavior continues. So we've had in the past.
Backlog or bookings has not been something that -- Ford as a Company has really had reason or cause to talk about. And I don't know that as of today that we do. But as we get further into the fourth quarter and then moving into 2022, that maybe something that because of the predictability that it helps with, we may be talking about that next year.
Okay. And my Peter -sanctioned second question then, is if you talk a little bit about the non-FortiGate mix. And I know you mentioned that in one of the previous questions, but how do you see that changing over the course of the next couple of quarters, if at all? And I'm not really talking about a supply chain constraint, but just on demand related pools.
As customers may look as they're deploying that incremental 6,000 customers and greater penetration on your existing -- do you see the software side moving up, if you will, in the non-FortiGate component. And then I will cede the floor. Thank you.
That's where what do we call Fabry on mash. We see put his strong demand from a customer and we both increased the amount repurchase also the customer about that anything new multiple products, Fabry are matched solution. So that's where we Canadian few hall restaurant growth sound non-op 40-k. And Also we said we'll can be assemblies provide a carrier on the SaaS east and modest solution. You eventually will also benefit broader customer base.
Okay. All right. Many thanks and congratulations for the incredible results.
Thank you.
And there are no further questions at this time. That concludes the Q&A session. I will now turn the call back to Peter Zarkowski for closing remarks.
Thank you, Eli. I would like to. Thanks everyone for joining the call today. I know you have a lot of calls this evening. Really appreciate your time. Fortinet will be attending the following investor conferences during the fourth quarter with the Wells Fargo Conference on November 30th, the NASDAQ Conference on December first, second, the UBS Conference on December seventh in the Barclays conference on December eighth is events was presentations will be webcast and links to the webcast will be available. Well on the Investor Relations website of fortinet at investor.com. If you have any follow-up questions, please feel free to reach out. Have a good day. Thanks very much for your time. Have a good day.
And this concludes today's conference call. Thank you all for participating. You may now disconnect.