Fortinet Stock Cruises on Stupendous Q2 Report (FTNT)

Cybersecurity stocks have been going absolutely bonkers recently, and why wouldn’t they? Cyber crime is on the rise, and with tens of millions of Americans getting their information stolen, governments and corporations are scrambling to find solutions.

Enter Fortinet (FTNT) and its cybersecurity peers.

fortinet-ftnt-stockBefore today’s sharp gains, FTNT stock had already risen an incredible 76% in the past year. But the company, which is behind the FortiGate line of firewalls and unified threat management systems, could still be in its early stages of growth. Second-quarter earnings smashed expectations, and FTNT jumped as much as 12% on the beat.

Here are the highlights from the most recent Fortinet earnings report.

EPS, Revenue Beat, Guidance Up, FCF Doubles

It’s tough to imagine a quarter much better than the one Fortinet just reported. Revenue jumped 30% year-over-year to $240 million, while adjusted earnings came in at 11 cents per share. Analysts were only expecting revenue of $227.6 million and EPS of 9 cents.

But investing, of course, is all about the future, and the future of FTNT stock is looking brighter than ever. The company raised its full-year revenue guidance from the $935 million to $940 million range to the $1 billion to $1.01 billion range. In a rare show of exuberance for a public company, FTNT entitled its earnings report “Fortinet Reports Excellent Second Quarter 2015 Financial Results.”

On top of that, free cash flow jumped 116% to $74 million. Billings increased at a record 40% clip, deferred revenues were up 37%, and the U.S. enterprise business grew by a whopping 90%.

FTNT stock owners, go ahead and pat yourself on the back, because it gets better. CFO Andrew Del Matto broke down some of the even more impressive metrics:

“Within the Fortune 100, we landed six new accounts and expanded within 20 existing accounts.”

In other words, Fortinet is getting scary good at hauling in the big fish. Preach, Del Matto:

“The number of large deals, or deals over $100,000, grew 53%, and deals over $1 million grew 133%; both greater than our 40% billings growth. This illustrates the traction we are seeing with enterprise customers and is a positive sign for our future, as many of these large deals are just the first seat at large tables.”

In short, Fortinet earnings only confirmed what I’ve suspected for some time: FTNT is a best-in-class cybersecurity outfit and one of the best stocks to buy in the area. Although I also like Palo Alto Networks (PANW) and believe FireEye (FEYE) is a fine momentum play, Fortinet is actually profitable and consistently throwing off free cash flows.

Although Fortinet has already enjoyed a massive run-up over the last year, I don’t see cybersecurity problems going away any time soon. If you want a pure-play on the area, FTNT stock is a great way to go.

As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.

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