“We believe we can achieve number one market share in SD-WAN in the next couple of years.”

In context

“Ken Xie (Founder, Chairman, and CEO): Thanks, Peter, and thank you to everyone for joining today’s call to review our outstanding third quarter 2022 results. Revenue for the quarter grew 33%, significantly outpacing the industry growth rate. We believe that customer recognition of the exceptional value proposition we provide through our high-performance Forti-ASIC technology and integrated FortiOS operating system is driving our ability to take cybersecurity market share. Product revenue growth was very strong at 39%, extending our position as a product revenue leader in the cybersecurity industry. Our product revenue performance reflects the strong demand we have built over the past 18 months across our security solutions along with the successful execution of our internal teams in managing supply chain challenges. Three growth drivers, the heightened threat environment, the convergence of security and networking, and the consolidation of security functionality among vendors, together with the opportunity to upsell additional security services to our significant installed base, are expected to drive future growth. First, the threat landscape, including ransomware, continues to expand and evolve, targeting companies of all sizes, locations, and industries. To counter the threat landscape, we are implementing our unique Universal ZTNA across a wide range of customers, driving triple-digit growth for this product and delivering a comprehensive approach to zero trust that is consistent for any user, anywhere, on any device, and supporting today’s hybrid workforce. Second, for years, Fortinet has led strategies around the convergence of networking and security. We estimate the total addressable market for networking and security will increase from $54 billion today to $73 billion in 2026. Convergence accelerates digital transformation and substantially reduces operational costs by combining networking modernization with dynamic security that seamlessly spans every part of the network, especially now that many companies are merging SOC and NOC operations together. Fortinet is leading the convergence trend with a wide range of technologies including Network Firewall and Segmentation, Secure SD-WAN, OT Security, and 5G in a single operating system which can be deployed as hardware, software, cloud, and as a service. Fortinet continues to gain Secure SD-WAN market share as our integrated Secure SD-WAN solution delivers better security, performance, and efficiencies over more traditional offerings. In the quarter, SD-WAN and OT bookings grew over 45% and 75% respectively, and together accounted for over 25% of total bookings. We believe we can achieve number one market share in SD-WAN in the next couple of years. Today, we announced the FortiGate 1000F, our latest innovation in converging networking and security. Powered by our new NP7 SPU, the 1000F delivers 5 to 10 times higher performance across six major network security functions while consuming 80% less power versus competitive solutions. The lower power consumption was a contributing factor in our top 2% ranking in the S&P Global Corporate Sustainability Assessment. Our third growth driver is the consolidation of vendors and product functionality. With Forti-ASIC’s huge computing power advantage, FortiOS can integrate more security functions than our competitors, together with over 30 key products ranging from endpoint to network to cloud security. Fortinet provides our customers with easier operation while lowering management costs and the total cost of ownership. Additionally, we are very focused on upselling value-added security services to our significant customer base. According to IDC’s second-quarter unit share data, Fortinet holds a number one market share position for units shipped at 43%, up 210 basis points. We expect to reach 50% market share in the next few years. This leadership position and the substantial installed base create attractive economies of scale and the opportunity to upsell additional security services. Before turning the call over to Keith, I would like to thank our employees, customers, partners, and suppliers worldwide for their continued support and hard work. Keith?”