By RTT News, October 23, 2013, 11:33:00 PM EDT
(RTTNews.com) - Share of Fortinet, Inc. ( FTNT ) surged nearly seven percent in extended trade on Wednesday after the network security solutions provider reported results for the third quarter that topped analysts' expectations. However, the company reported a profit for the quarter that declined from last year, despite double-digit revenue growth, reflecting significantly lower operating margins.
"We were very pleased with our solid execution during the third quarter, particularly our ability to exceed the high end of our billings, revenue and earnings per share expectations," Founder, President and CEO Ken Xie said in a statement.
The Sunnyvale, California-based company reported net income of $11.0 million or $0.07 per share for the third quarter, lower than $17.2 million or $0.10 per share in the prior-year quarter.
Excluding items, adjusted net income for the quarter was $20.2 million or $0.12 per share, compared to $23.3 million or $0.14 per share in the year-ago quarter.
On average, 26 analysts polled by Thomson Reuters expected the company to report earnings of $0.11 per share for the quarter. Analysts' estimates typically exclude special items.
Total revenue for the quarter increased 14 percent to $154.7 million from $136.27 million in the same quarter last year, and topped twenty-three Wall Street analysts' consensus estimate of $151.06 million.
The company's deferred revenue as of the end of the third quarter stood at $400.2 million, up 18 percent from last year, and billings grew 14 percent year-over-year to $165.2 million.
Product revenues for the quarter increased 11 percent to $70 million from a year ago, and services revenues were $84 million, up 20 percent from last year. Meanwhile, ratable product and services revenue declined to $1.13 million from $3.46 million last year.
Operating margin for the quarter contracted 700 basis points to 12 percent from last year's 19 percent, and adjusted operating margin dropped 600 basis points to 19 percent.
"Our performance highlights the underlying strength of our technology and market adoption of Fortinet's solutions across the globe. We are excited about the innovation we delivered with our latest FortiASIC NP-6 processor, which enables the fastest firewall and IPS performance in the industry and brings with it meaningful benefits to customers," Xie added.
FTNT closed Wednesday's regular trading session at $29.56, down $0.13 or 0.63% on a volume of 2.89 million shares. However, the stock surged $1.34 or 6.52% in the extended hours trading.
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