Fortinet

Location · Approximate Owned Square Footage · Description of Use

United States · 2,400 · Corporate headquarters, data centers, research and development, warehousing and operations, sales and support functions, and PoP

Canada · 1,000 · Data center and office space, sales and support, research and development functions, and PoP

EMEA · 910 · Data center and office space, warehousing and operations, sales and support functions, and PoP

Asia Pacific (“APAC”) · 40 · Office space and PoP

Total · 4,350

We maintain additional leased offices throughout the world, predominantly used as sales and support offices and PoP, and leased data center spaces throughout the world operated under colocation arrangements. We believe that our existing properties are sufficient and suitable to meet our current needs. We intend to expand our facilities, develop unoccupied space, or add new facilities to support our future growth and enter new product markets, and we believe that suitable additional space will be available or can be developed as needed to accommodate ongoing operations and any such growth. However, we expect to incur additional operating expenses and capital expenditures in connection with such new or expanded facilities.

For information regarding the geographical location of our property and equipment, refer to Note 15. of our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K.

• Fortinet Security Israel Ltd. Israel⁸
• Fortinet Security Italy S.R.L. Italy⁸
• Fortinet Security LLC Qatar⁸
• Fortinet Security NZ Limited New Zealand⁸
• Fortinet Security Network (Thailand) Ltd. Thailand⁸
• Fortinet Security Philippines, Inc. Philippines⁸
• Fortinet Security Spain SL Spain⁸
• Fortinet Singapore Private Limited Singapore⁸
• Fortinet Switzerland GmbH Switzerland⁸
• Fortinet Technologies (Canada) ULC Canada⁸
• Fortinet Technologies India Private Limited India⁸
• Fortinet Turkey Güvenlik Sistemleri Limited Şirketi Turkey⁸
• Fortinet UK Limited United Kingdom⁸
• Holdings 1502 Enterprises Ltd. Canada⁸
• Holdings 1504 Enterprises Inc. Canada⁸
• Holdings 1506 Enterprises Ltd. Canada⁸
• Holdings 1507 Enterprises Ltd. Canada⁸
• Lacework Australia Pty Limited Australia⁸
• Lacework EMEA Ltd United Kingdom⁸
• Lacework Iceland ehf. Iceland⁸
• Lacework Netherlands B.V. Netherlands⁸
• Lacework Security India Private Limited India⁸
• Lacework Singapore PTE. Limited Singapore⁸
• Lacework Sweden AB Sweden⁸
• Lacework Switzerland GmbH Switzerland⁸
• Lacework Technology Canada Inc. Canada⁸
• Linksys Cayman, LLC Cayman Islands⁸
• Linksys HK Limited Hong Kong⁸
• Linksys PTE LTD Singapore⁸
• Linksys UK Limited United Kingdom⁸
• Next DLP Holdings Limited United Kingdom⁸
• Next DLP Limited United Kingdom⁸
• PT Fortinet Indonesia Security Indonesia⁸

• We have incurred indebtedness and may incur other debt in the future, which may adversely affect our financial condition and future financial results.
• Risks Related to Our Sales and End-Customers
• We generate a majority of revenue from sales to distributors, resellers and end-customers outside of the United States, and we are therefore subject to a number of risks associated with international sales and operations.
• If we are not successful in continuing to execute our strategy to increase our sales to large- and medium-sized end-customers, our results of operations may suffer.
• If we do not increase the effectiveness of our sales organization, we may have difficulty adding new end-customers or increasing sales to our existing end-customers and our business may be adversely affected.
• Unless we continue to develop better market awareness of our company and our products, and to improve lead generation and sales enablement, our revenue may not continue to grow.
• Some of our sales are to government organizations, which subjects us to a number of regulatory requirements, their own supply chain constraints and contractual requirements, challenges and risks.
• Risks Related to Our Products and Services, Industry and Customers
• Actual, possible or perceived defects, errors or vulnerabilities, including critical vulnerabilities, in our products or services, the failure of our products or services to detect or prevent a security incident or the misuse of our products could harm our and our customers’ operational results and reputation.
• Managing inventory of our products and product components is complex. We order components from third-party manufacturers based on our forecasts of future demand and targeted inventory levels, which exposes us to the risk of product shortages, which may result in lost sales, higher expenses and excess inventory, which may require us to sell our products at discounts and lead to inventory charges or write-offs.
• If our new products, services and enhancements do not achieve sufficient market acceptance, our results of operations and competitive position will suffer.
• The network security market is rapidly evolving and the complex technology incorporated in our products makes them difficult to develop. If we do not accurately predict, prepare for and respond promptly to technological and market developments, changing end-customer needs, and expanding regulatory requirements and standards, our competitive position and prospects may be harmed.
• Demand for our products may be limited by market perception that individual products from one vendor that provide multiple layers of security protection in one product are inferior to point products from multiple vendors.
• If functionality similar to that offered by our products is incorporated into existing network infrastructure products, organizations may decide against adding our appliances to their network, which would have an adverse effect on our business.
• Because we depend on several third-party manufacturers to build our products, we are susceptible to manufacturing delays that could prevent us from shipping customer orders on time, if at all, and may result in the loss of sales and customers; additionally third-party manufacturing cost increases and changes in the geopolitical environment could result in lower gross margins and free cash flow.
• Because some of the key components in our products come from limited sources of supply, we are susceptible to supply shortages, long or uncertain lead times for components, and supply changes, each of which could disrupt or delay our scheduled product deliveries to our customers, result in inventory shortage, cause loss of sales and customers or increase component costs resulting in lower gross margins and free cash flow.
• We offer retroactive price protection to certain of our major distributors in North America, and if we fail to balance their inventory with end-customer demand for our products, our allowance for price protection may be inadequate, which could adversely affect our results of operations.
• The sales prices of our products and services may decrease, which may reduce our gross profits and operating margin and may adversely impact our financial results and the trading price of our common stock.
• Our uniform resource locator (“URL”) database for our web filtering service may fail to keep pace with the rapid growth of URLs and may not categorize websites in accordance with our end-customers’ expectations.
• False positive detection of legitimate non-malicious files as viruses or malware or false identification of legitimate emails as spam, could adversely affect our business.
• Our ability to sell our products is dependent on our quality control processes and the quality of our technical support services, and our failure to offer high-quality technical support services could have a material adverse effect on our sales and results of operations.
• If the availability of our cloud-based subscription services does not meet our service-level commitments to our customers, our current and future revenue may be negatively impacted.
• Risks Related to our Systems and Technology
• If we do not appropriately manage any future growth, including through the expansion of our real estate facilities, or are unable to improve our systems, processes and controls, our operating results will be negatively affected.
• We may experience difficulties maintaining and expanding our internal business management systems.
• We may not be successful in our artificial intelligence initiatives, which could adversely affect our business, reputation, or financial results.
• The use of AI technology in our IT infrastructure could improve internal process but poses security and privacy risks.
• Risks Related to our Intellectual Property
• Our proprietary rights may be difficult to enforce and we may be subject to claims by others that we infringe their propriety technology.
• Our products contain third-party open-source software components, and failure to comply with the terms of the underlying open-source software licenses could restrict our ability to sell our products or result in loss of IP.
• Claims by others that we infringe their proprietary technology or other litigation matters could harm our business.
• We rely on the availability of third-party licenses.
• Other Risks Related to Our Business and Financial Position
• Our inability to successfully acquire and integrate other businesses, products or technologies, or to successfully invest in and form successful strategic alliances with other businesses, could seriously harm our competitive position and could negatively affect our financial condition and results of operations.
• Failure to comply with laws and regulations applicable to our business could subject us to fines and penalties and could also cause us to lose end-customers or negatively impact our ability to contract.
• We are currently, and may in the future become, involved in litigation that may adversely affect us.
• We are subject to governmental export and import controls that could subject us to liability or restrictions on sales, and that could impair our ability to compete in international markets.
• If we fail to comply with environmental requirements, our business, financial condition, operating results and reputation could be adversely affected.
• Investors’ expectations of our performance relating to corporate responsibility and sustainability factors may impose additional costs and expose us to new risks.
• Risks Related to Finance, Accounting and Tax Matters
• If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our operating results could fall below expectations of securities analysts and investors, resulting in a decline in our stock price.
• We are exposed to fluctuations in currency exchange rates, which could negatively affect our financial condition and results of operations.
• We could be subject to changes in our tax rates, the adoption of new U.S. or international tax legislation, exposure to additional tax liabilities or impacts from the timing of tax payments.
• Forecasting our estimated annual effective tax rate is complex and subject to uncertainty, and there may be material differences between our forecasted and actual tax rates.
• Risks Related to Ownership of Our Common Stock
• As a public company, we are subject to compliance initiatives that will require substantial time from our management and result in significantly increased costs that may adversely affect our operating results and financial condition.
• If equity research or industry analysts stop publishing research or reports about our business, issue unfavorable commentary, downgrade our shares of common stock or publish inaccurate information, our stock price and trading volume could decline.
• The trading price of our common stock may be volatile, which may be exacerbated by share repurchases under our Share Repurchase Program.
• Share repurchases under the Repurchase Program could increase the volatility of the trading price of our common stock, could diminish our cash reserves, could occur at non-optimal prices and may not result in the most effective use of our capital.
• Anti-takeover provisions contained in our certificate of incorporation and bylaws, as well as provisions of Delaware law, could impair a takeover attempt.
• General Risks
• Global economic uncertainty, an economic downturn, the possibility of a recession, inflation, changing interest rates, changes to government spending and regulations, and weakening product demand could adversely affect our business and financial performance.
• Political instability, changes in trade policies and agreements and conflicts could adversely affect our business and financial performance.
• Changes in financial accounting standards may cause adverse unexpected fluctuations and affect our reported results of operations.