Fortinet, Inc. reported strong financial performance for the third quarter and the first nine months of 2024, with total revenue reaching $1,508.1 million for Q3, a 13% increase from $1,334.6 million in the same period of 2023. For the nine months ended September 30, 2024, total revenue was $4,295.7 million, up 10% from $3,889.7 million year-over-year. The growth was driven by a significant increase in service revenue, which rose 19% in Q3 and 21% for the nine-month period, primarily due to a 20% increase in security subscription revenue.

Product revenue showed a modest increase of 2% in Q3 2024, totaling $473.9 million, but experienced a 7% decline for the nine months, reflecting a decrease in hardware sales. Total gross profit for Q3 was $1,244.7 million, marking a 22% increase from $1,016.9 million in Q3 2023, with gross margins improving to 82.5% from 76.2% year-over-year. Operating income for Q3 2024 was $470.9 million, a 55% increase from $303.2 million in Q3 2023, resulting in an operating margin of 31.2%, up from 22.7%.

Net income for Q3 2024 was $539.9 million, compared to $322.9 million in Q3 2023, with basic net income per share rising to $0.71 from $0.41. For the nine months ended September 30, 2024, net income was $1,219.0 million, up from $836.9 million in the same period of 2023.

Fortinet's total assets increased to $8,852.0 million as of September 30, 2024, from $7,258.9 million at the end of 2023. Cash and cash equivalents rose significantly to $2,489.3 million, compared to $1,397.9 million at the end of 2023. The company also reported an improvement in its accumulated deficit, which decreased to $(643.3) million from $(1,861.7) million.

Strategically, Fortinet completed two acquisitions in August 2024: Lacework Inc. for $152.3 million and Next DLP Holdings Limited for approximately $105.0 million. The Lacework acquisition is expected to enhance Fortinet's cloud security offerings, while the Next DLP acquisition aims to strengthen its position in the enterprise data loss prevention market. The Lacework acquisition contributed $12.9 million in revenue but incurred a net loss of $21.6 million for the period from August 2 to September 30, 2024.

Operating expenses increased by 8% in Q3 2024, driven by higher research and development costs, which rose 19% due to increased personnel-related expenses. Despite this, the company managed to improve its operating margin, reflecting effective cost management amid revenue growth. Fortinet's effective tax rate for Q3 2024 was 13%, compared to 0% in the same period last year, influenced by various tax benefits.

Overall, Fortinet's financial results indicate robust growth in service revenue, improved profitability, and strategic acquisitions aimed at enhancing its market position.