Cybersecurity services provider Fortinet (FTNT) has reported strong results for the fourth quarter of 2023, leading to a surge in its shares by over 12% after the closing bell on Tuesday. The company outperformed market expectations with better-than-expected Q4 earnings and revenue.

Fortinet posted Q4 earnings per share (EPS) of $0.51, surpassing the consensus estimates of $0.43. The revenue also exceeded expectations, coming in at $1.42 billion, marking a 10% year-over-year increase. Service revenue witnessed a significant jump of 25% year-over-year to $927.0 million, surpassing the predicted $914.8 million. However, product revenue experienced a decline of 9.6% year-over-year to $488.1 million, falling short of the anticipated $498.1 million.

The company’s deferred revenue grew by 24% year-over-year to $5.74 billion, outperforming the estimate of $5.5 billion. Billings reached $1.86 billion, marking an 8.5% increase year-over-year, surpassing the expected $1.62 billion. The adjusted operating margin remained stable at 32%, compared to 32.5% the previous year, and was higher than the expected 27.9%.

Looking ahead, Fortinet projects its EPS for the first quarter of 2024 to be between $0.37 and $0.39, aligning with the average analyst expectation of $0.37. The company anticipates Q1 revenue to range from $1.3 billion to $1.36 billion, slightly below the analyst consensus of $1.37 billion. Billings are seen ranging from $1.39 billion to $1.45 billion in the first quarter, compared to the consensus estimates of $1.47 billion.

For the full year 2024, Fortinet forecasts its EPS to be in the range of $1.65 to $1.70, closely matching the consensus estimate of $1.67. The company’s expected revenue for the year is projected to be between $5.715 billion and $5.815 billion, falling short of the consensus forecast of $5.93 billion. Full-year billings are anticipated to be in the range of $6.40 billion to $6.60 billion, while analysts guided for $6.52 billion.

Ken Xie, Founder, Chairman, and CEO of Fortinet, attributed the strong results to the growth in Security Operations billings by 44% year over year and a 19% increase in SASE billings, driven by the successful sales strategy shift and improved execution of sales teams.