“As a result, we are maintaining our full-year billings and revenue guidance ranges to account for potential top line risks associated with the evolving geopolitical environment.”

In context

“Christiane Ohlgart (CAO and Sales Operations Leader): Thank you, Keith. As Ken mentioned earlier, the noteworthy headline in this uncertain macroeconomic environment is that customer adoption of our solutions is accelerating. This momentum is driven by two key factors: one, our decades-long innovation leadership, and two, our competitively differentiated dedication to putting the customer first. Together this creates a powerful network effect with some of the most discerning organizations rapidly adopting Fortinet solutions at scale. This is exemplified by Fortinet being the number one solution at firewall, as well as a leader in SD-WAN and OT security. Also, our leading SASE strategy is driving strong growth, reinforcing our confidence in becoming the number one player in the SASE market. Building on this momentum, our SSE solution is gaining strong traction fueled by continued success in up-selling SSE to our large SD-WAN customer base. With both ARR and billings growth at over 100%, we believe FortiSASE is the fastest growing SSE solution at scale in the market. As shown on Slide 7, the typical FortiSASE journey begins with a customer purchasing our market-leading FortiGate firewall, followed by an expansion to SD-WAN and then onto our single vendor SASE solution. Our adoption of SD-WAN and SSE continues to grow with our large enterprise expansion penetration rates increasing to 73% and 11% respectively, with the SSE penetration rate growth increasing nearly 10% quarter-over-quarter. In addition, a second customer buying journey illustrates the growing convergence of security and networking. It too starts with our FortiGate firewalls and expands to our switches and access points. The key to this expansion is FortiOS, FortiLink technology, which enables seamless management of our switches and access points through our unified operating system. Our increased penetration rates show the success of this strategy. Now, I'd like to review some deals that showcase our SASE adoption and customer expansion. In an eight-figure displacement deal, an international government purchased our SD-WAN solution as well as our FortiSASE solution to secure the hybrid workforce of 6,000 users. This customer chose Fortinet for its ability to deliver flexible and consistent security enforcement, ensuring secure access to both on-premises and cloud applications while maintaining a seamless user experience. By harnessing the power of our FortiOS, we delivered superior performance over the competition, reduced total cost of ownership, and effectively consolidated multiple security functions into a single integrated platform. In another SASE win, we replaced the incumbent vendor at an international education provider, which chose FortiSASE for their 40,000 users. The decision to transition to FortiSASE was driven by ongoing performance challenges with their previous SASE vendor. Keys to this win included FortiSASE’s ease of use, seamless integration with the Fortinet Security Fabric, and proven scalability across their SD-WAN sites. Based on the success from their proof of concept, this customer will benefit from improved performance, consistent security for users everywhere, and greater operational efficiency. In a seven-figure deal, a large multinational manufacturing company selected our SD-WAN and multiple SecOps solutions. Fortinet displaced the legacy SD-WAN provider by demonstrating how FortiOS simplifies operations, reduces total cost of ownership, and unifies security and networking functions on a single platform. The integrated nature of FortiOS also enabled seamless alignment with the company's existing Fortinet security infrastructure, establishing a strong foundation for future projects. Lastly, a Fortune-500 company signed an eight-figure deal that spans all three of our pillars. Over the past three years, they've expanded their FortiGate installed base by more than 80%, driven by our world-class support for their data centers and branch locations, as well as the automation and seamless integration enabled by our FortiOS operating system. Rounding out the billing's commentary, larger enterprise was our top-performing customer segment with growth of around 30%. The number of deals greater than $1 million were up 30%, including three eight-figure deals this quarter, up from one during the same period last year. EMEA was our best performing geography driven by mid-teens growth from international emerging markets. Among our top five verticals, financial services and worldwide government led the way with growth of over 20%. Before moving on to guidance, I'd like to spend a few minutes discussing the current U.S. tariff situation. The U.S. tariff situation landscape is evolving rapidly, and our comments on this call reflect the information currently available to us. Despite the current geopolitical uncertainties, demand for our cyber-security solutions remains strong. Our pipeline continues to grow, and we are not seeing signs of near-term erosion. Additionally, our close rates remain robust, and sales cycles are tracking within our normal historical range. For the second quarter, we do not expect U.S. tariffs to have a meaningful impact on our operating margin, as only a few components are subject to tariff charges. Should tariffs increase in the future, we expect any resulting impact on our operating margin to be limited to hardware sales to U.S. customers. As long as our international hardware sales do not flow through the U.S., they are not subject to U.S. import tariffs. Moving on to guidance, as a reminder, our second quarter and full-year outlook are subject to the disclaimers regarding forward-looking information that Aaron provided at the beginning of the call. While our business remains strong and we outperformed on the top line in the first quarter, with continued confidence in our ability to execute, we recognize that our customers' investment decisions can be influenced by the broader economic outlook. As a result, we are maintaining our full-year billings and revenue guidance ranges to account for potential top line risks associated with the evolving geopolitical environment. Regarding the record firewall upgrade cycle that we've spoken about previously, we continue to expect the firewall upgrade cycle to gain momentum in both purchasing and planning activities in the second half of 2025.”