Ken Xie Q&A: Fortinet’s Continued Business Growth and Differentiators

Following Fortinet's earnings, we had a conversation with Ken Xie, Founder, Chairman of the Board, and CEO of Fortinet, to get his insights into the company's 2023 first quarter results, Fortinet's unique approach to security and networking, and his thoughts about the future of cybersecurity.

Can you provide an overview of the financial results for the first quarter of 2023?

Ken: Our revenue growth in the first quarter was 32%; this was due to strong product and service revenue growth, which is a significant accomplishment. Quarterly service revenue also grew over 30% for the first time in six years. With 35% product revenue growth, we continue to gain market share while being a leading product revenue company in the cybersecurity industry.

What's behind Fortinet's continued market share growth?

Ken: More and more organizations recognize that they must converge networking and security to reduce complexity and overhead and enable the flexibility they need to adapt to today's rapidly evolving digital marketplace. And Fortinet is the industry leader in network and security convergence and cybersecurity consolidation.

We continue to gain market share because our customers increasingly recognize how our integrated platform approach delivers a lower total cost of ownership and a greater return on investment than competing point solutions. As our vision of the convergence of security and networking-beginning more than 20 years ago-becomes a reality for more and more organizations, our innovation in this area provides solutions that our competitors will not have for years.

The challenge for many vendors, and their customers, is that security requires much more computing power to handle the unstructured data that flows through networks. Traditional networking solutions cannot keep up because they were never designed to provide the processing power required by data inspection and analysis. And cybersecurity solutions, which rely on off-the-shelf processors, already struggle to provide essential security functions, such as inspecting encrypted traffic.

Fortinet addresses these hurdles with the Security Fabric platform, which runs on a unified operating system for maximum interoperability between the solutions in our broad security and networking portfolio. We also have the industry's only security and networking-oriented ASICs so that we can provide the power and performance that today's networks demand.

You mentioned the growing need for network and security convergence. How is Fortinet helping organizations achieve this?

Ken: Organizations are looking to consolidate security vendors and functions deployed across their expanding attack surface. Their goal is to lower TCO and management costs while improving visibility and enabling real-time threat detection and response through automation-something impossible with a collection of isolated solutions.

Our secure networking solution portfolio has expanded from Next-Generation Firewalls to include Secure SD-WAN, SD-Branch, 5G, internal segmentation, ZTNA, endpoint protection, and Universal SASE to address this. We also enhance these solutions with our AI-powered services. Because we can seamlessly integrate all of this into a single, cohesive solution, we can automate threat correlation and coordinated response end to end. No one else can do this, which is why we believe the secure networking market can achieve double-digit growth annually for the foreseeable future.

You mentioned Universal SASE as key to Fortinet's success. What differentiates Fortinet's SASE strategy from others in the market?

Ken: Fortinet's Universal SASE supports hybrid infrastructure environments and delivers the same networking and security features in our appliances to be delivered as-a-service, all from a single console. Because of our unique approach, many of our service provider partners are now collaborating with us on this offering.

This is only possible because our SASE solution runs on the same OS everywhere for consistent functionality, policy orchestration and enforcement, and centralized management. This approach enables a more integrated, broadly distributed solution that can leverage whatever infrastructure is available.

Looking forward, what are the most critical areas of focus for Fortinet?

Ken: From a financial and technological perspective, our goal is to become #1 in the network firewall, Secure SD-WAN, and OT security markets over the next few years. We are well on our way to meeting those objectives. We already ship more firewalls than any other vendor, and in the first quarter, SD-WAN and OT bookings continued to account for over 25% of our total bookings.

Outside of technology, what is another area of focus for Fortinet?

We also take our role as a global cybersecurity leader very seriously and are committed to investing in private-public partnerships to further aid in the disruption of cybercrime.

For example, we are a founding member of the World Economic Forum's Centre for Cybersecurity, where I serve as a member of the Centre's Advisory Board. Fortinet also actively contributes to the Forum's Partnership Against Cybercrime effort and supported the Forum in launching its Cybercrime Atlas, a tool that delivers first-of-its-kind visibility into criminals and their behavior to aid industry, law enforcement, and government agencies in disrupting cybercrime.

We are also a long-standing member of the North American Treaty Organization (NATO) Industry Cyber Partnership, a partner of the U.S. government's National Institute of Standards and Technology (NIST) National Cybersecurity Excellence Partnership (NCEP) program, and an active member of the International Criminal Police Organization (INTERPOL) Gateway. Finally, we are members of the MITRE Engenuity Center for Threat Informed Defense (CTID), providing threat intelligence from FortiGuard Labs to advance what is known about cyber adversaries globally.

Find out how the Fortinet Security Fabric platform delivers broad, integrated, and automated protection across an organization's entire digital attack surface to deliver consistent security across all networks, endpoints, and clouds.

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