Shares of cybersecurity company Fortinet (NASDAQ:FTNT) soared on Friday after the company reported its fourth-quarter results. Fortinet handily beat analyst estimates for both revenue and earnings, and it provided solid guidance for the first quarter and for the full year. At 11:30 a.m. EST, the stock was up about 13%.
Fortinet reported fourth-quarter revenue of $362.8 million, up 22% year over year and $18 million higher than the average analyst estimate. Product revenue grew 10% year over year to $158.9 million, while service revenue jumped 34% to $203.9 million. Billings were $463.4 million, up 22% year over year.
Non-GAAP EPS came in at $0.30, up from $0.18 during the prior-year period and $0.09 better than analysts were expecting. GAAP gross margin surged 2.5 percentage points to 74.9%, while GAAP operating income more than tripled. Free cash flow surged 40% to $84 million.
Fortinet CEO Ken Xie spoke broadly about the company's performance:
We are pleased with our strong finish to 2016, demonstrating our strong technology advantage and revenue growth. Our ability to provide a broad, powerful, and automated Security Fabric that protects all points in the network, from IoT to cloud, sets Fortinet apart. This technology advantage, combined with improvements in sales execution delivered strong results in the mid to large enterprise segments of the market and positions us well for future growth.
Fortinet expects to produce revenue in the range of $330 million to $335 million for the first quarter and $1.47 billion to $1.48 billion for the full year. The first-quarter guidance compares favorably to analyst expectations of $332.2 million. Non-GAAP EPS is expected to be between $0.15 and $0.16 for the first quarter and between $0.87 and $0.89 for the full year. Analysts were expecting EPS of $0.15 and $0.81, respectively.
An earnings beat and largely favorable guidance sent shares of Fortinet surging on Friday. The stock created a new 52-week high before pulling back slightly, rewarding investors who bought at lower prices in the past few months. Revenue growth will slow down in 2017 as per the company's guidance, but the outlook was more than enough to please investors.