0001262039-18-000019 | 10-Q | XBRL Viewer

Net Income Per Share (Tables)

3 Months Ended

Mar. 31, 2018

Schedule of Earnings Per Share, Basic and Diluted

A reconciliation of the numerator and denominator used in the calculation of basic and diluted net income per share is as follows (in millions, except per share amounts):



	Three Months Ended
	March 31, 2018		March 31, 2017
Numerator:
Net income	$	41.6	$	10.7

Denominator:
Basic shares:
Weighted-average common stock outstanding-basic	167.7		174.5
Diluted shares:
Weighted-average common stock outstanding-basic	167.7		174.5
Effect of potentially dilutive securities:
RSUs	2.7		2.2
Stock options	1.3		1.5
ESPP	0.1		0.1
Weighted-average shares used to compute diluted net income per share	171.8		178.3
Net income per share:
Basic	$	0.25	$	0.06
Diluted	$	0.24	$	0.06

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following weighted-average shares of common stock were excluded from the computation of diluted net income per share for the periods presented, as their effect would have been antidilutive (in millions):



	Three Months Ended
	March 31, 2018	March 31, 2017
RSUs	1.1	2.5
Stock options	0.5	1.1
ESPP	0.2	0.3
	1.8	3.9

Property and Equipment—Net

3 Months Ended

Mar. 31, 2018

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT—Net

Property and equipment—net consisted of the following (in millions):



	March 31, 2018			December 31, 2017
Building and building improvements	$	135.2		$	133.2
Computer equipment and software	86.9			79.9
Land	65.6			65.6
Leasehold improvements	21.5			20.8
Evaluation units	19.2			20.1
Furniture and fixtures	15.4			14.7
Construction-in-progress	2.9			6.3
Total property and equipment	346.7			340.6
Less: accumulated depreciation	(101.6		)	(95.2		)
Property and equipment—net	$	245.1		$	245.4

Depreciation expense was $11.4 million and $11.2 million during the three months ended March 31, 2018 and March 31, 2017, respectively.

Segment Information (Details) $ in Millions	3 Months Ended		12 Months Ended
Segment Information (Details) $ in Millions	Mar. 31, 2018 USD ($) reportable_segment Segment_Managers business_activity operating_segment	Mar. 31, 2017 USD ($)	Dec. 31, 2017 USD ($)
Segment Reporting Information [Line Items]
Business activity (in business activities) \| business_activity	1
Segment managers responsible for operations (in segment managers) \| Segment_Managers	0
Number of operating segments (in operating segments) \| operating_segment	1
Number of reportable segments (in reportable segments) \| reportable_segment	1
Revenue	$ 399.0	$ 340.6
Property and equipment - net	245.1		$ 245.4
Americas [Member]
Segment Reporting Information [Line Items]
Revenue	175.8	146.4
Property and equipment - net	218.9		219.7
U.S.
Segment Reporting Information [Line Items]
Revenue	133.9	116.0
Property and equipment - net	115.3		115.6
CANADA
Segment Reporting Information [Line Items]
Revenue	26.5	18.2
Property and equipment - net	103.2		103.8
Other Americas
Segment Reporting Information [Line Items]
Revenue	15.4	12.2
Property and equipment - net	0.4		0.3
EMEA
Segment Reporting Information [Line Items]
Revenue	144.5	126.1
Property and equipment - net	17.0		17.7
France
Segment Reporting Information [Line Items]
Property and equipment - net	13.1		11.9
Other EMEA
Segment Reporting Information [Line Items]
Property and equipment - net	3.9		5.8
APAC
Segment Reporting Information [Line Items]
Revenue	78.7	$ 68.1
Property and equipment - net	9.2		8.0
All Countries [Domain]
Segment Reporting Information [Line Items]
Property and equipment - net	$ 245.1		$ 245.4
Exclusive Networks Group [Member] \| Sales Revenue, Net [Member] \| Customer Concentration Risk [Member]
Segment Reporting Information [Line Items]
Concentration (percent)	29.00%	20.00%
Exclusive Networks Group [Member] \| Accounts Receivable [Member] \| Customer Concentration Risk [Member]
Segment Reporting Information [Line Items]
Concentration (percent)	34.00%		35.00%
Fin Tec Computers [Member] \| Sales Revenue, Net [Member] \| Customer Concentration Risk [Member]
Segment Reporting Information [Line Items]
Concentration (percent)		12.00%

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2018	Apr. 30, 2018
DEI [Abstract]
Entity Registrant Name	FORTINET INC
Entity Central Index Key	0001262039
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Amendment Flag	false
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Well Known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Common Stock, Shares Outstanding		168,097,115

Inventory (Details) - USD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017
Inventory, Net [Abstract]
Raw materials	$ 12.0	$ 13.0
Finished goods	68.0	64.3
Inventory	80.0	77.3
Materials at contract manufacturers	$ 2.0	2.6
Finished goods inventory held by distributors
Inventory, Net [Abstract]
Finished goods		$ 0.1

Defined Contribution Plans (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Retirement Benefits [Abstract]
Matching contribution on employee contributions, Percent	50.00%
Maximum contribution percentage of each employee's eligible earnings, Percent	4.00%
Matching contributions to the RRSP and 401(k) Plans	$ 1.5	$ 1.3

Goodwill and Other Intangible Assets - Net

3 Months Ended

Mar. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS - Net

GOODWILL AND OTHER INTANGIBLE ASSETS—Net

Goodwill

As of March 31, 2018, we had goodwill of $14.6 million. There were no impairments to goodwill during the three months ended March 31, 2018 or during prior periods.

Other Intangible Assets—net

The following tables present other intangible assets—net as of March 31, 2018 and December 31, 2017 (in millions, except years):



	March 31, 2018
	Weighted-Average Useful Life (in Years)	Gross		Accumulated Amortization		Net
Other intangible assets—net:
Finite-lived intangible assets:
Developed technologies and other	3.8	$	25.6	$	15.0	$	10.6
Customer relationships	4.7	14.5		10.6		3.9
		$	40.1	$	25.6	$	14.5



	December 31, 2017
	Weighted-Average Useful Life (in Years)	Gross		Accumulated Amortization		Net
Other intangible assets—net:
Finite-lived intangible assets:
Developed technologies and other	3.8	$	24.0	$	13.7	$	10.3
Customer relationships	4.7	14.5		10.1		4.4
		38.5		23.8		14.7

Indefinite-lived intangible assets:
In-process research and development		1.6		—		1.6
Total other intangible assets—net		$	40.1	$	23.8	$	16.3

The in-process research and development intangible asset of $1.6 million was completed in the first quarter of 2018. Upon completion, the cost was transferred to developed technology and is amortized over the estimated useful life of four years.

Amortization expense was $1.8 million and $2.3 million, during the three months ended March 31, 2018 and March 31, 2017, respectively. The following table summarizes estimated future amortization expense of finite-lived intangible assets—net (in millions):



	Amount
Years:
2018	$	5.4
2019	5.8
2020	2.8
2021 and thereafter	0.5
Total	$	14.5

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

Stockholders' Equity

3 Months Ended

Mar. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCKHOLDERS' EQUITY

STOCKHOLDERS’ EQUITY

Stock-Based Compensation Plans

We have stock-based compensation plans pursuant to which we have granted RSUs and stock options. We also have an ESPP for eligible employees. As of March 31, 2018, there were a total of 55.2 million shares of common stock available for grant under our stock-based compensation plans.

Restricted Stock Units

The following table summarizes the activity and related information for RSUs for the periods presented below (in millions, except per share amounts):



	Restricted Stock Units Outstanding
	Number of Shares		Weighted-Average Grant Date Fair Value per Share
Balance—December 31, 2017	8.5		$	34.79
Granted	2.5		49.05
Forfeited	(0.3	)	35.63
Vested	(1.4	)	34.15
Balance—March 31, 2018	9.3		$	38.86

As of March 31, 2018, total compensation expense related to unvested RSUs granted to employees and non-employees under the 2009 Plan, but not yet recognized, was $333.3 million. This expense is expected to be amortized on a straight-line basis over a weighted-average vesting period of 2.91 years.

RSUs settle into shares of common stock upon vesting. Upon the vesting of the RSUs, we net-settle the RSUs and withhold a portion of the shares to satisfy minimum statutory employee withholding taxes. Total payment for the employees’ tax obligations to the taxing authorities is reflected as a financing activity within the condensed consolidated statements of cash flows.

The following summarizes the number and value of the shares withheld for employee taxes (in millions):



	Three Months Ended
	March 31, 2018		March 31, 2017
Shares withheld for taxes	0.4		0.4
Amount withheld for taxes	$	19.2	$	13.7

Employee Stock Options

The following table summarizes the weighted-average assumptions relating to our employee stock options:



	Three Months Ended
	March 31, 2018		March 31, 2017
Expected term in years	4.4		4.4
Volatility	32	%	36	%
Risk-free interest rate	2.6	%	1.9	%
Dividend rate	—	%	—	%

The following table summarizes the stock option activity and related information for the periods presented below (in millions, except exercise prices and contractual life):



	Options Outstanding
	Number of Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Balance—December 31, 2017	4.3		$	27.50
Granted	0.7		49.06
Forfeited	(0.1	)	30.02
Exercised	(1.0	)	23.94
Balance—March 31, 2018	3.9		$	32.16
Options vested and expected to vest—March 31, 2018	3.9		$	32.16	4.03	$	83.4
Options exercisable—March 31, 2018	2.1		$	27.12	2.52	$	56.3

The aggregate intrinsic value represents the difference between the exercise price of stock options and the quoted market price of our common stock on March 31, 2018, for all in-the-money stock options. As of March 31, 2018, total compensation expense related to unvested stock options granted to employees but not yet recognized was $20.8 million. This expense is expected to be amortized on a straight-line basis over a weighted-average period of 3.0 years.

Additional information related to our stock options is summarized below (in millions, except per share amounts):



	Three Months Ended
	March 31, 2018		March 31, 2017
Weighted-average fair value per share granted	$	15.02	$	12.22
Intrinsic value of options exercised	23.7		17.9
Fair value of options vested	2.8		3.4

Employee Stock Purchase Plan

In determining the fair value of the ESPP, we use the Black-Scholes option pricing model that employs the following weighted-average assumptions:



	Three Months Ended
	March 31, 2018		March 31, 2017
Expected term in years	0.5		0.5
Volatility	27	%	33	%
Risk-free interest rate	1.8	%	0.7	%
Dividend rate	—	%	—	%

Additional information related to the ESPP is provided below (in millions, except per share amounts):



	Three Months Ended
	March 31, 2018		March 31, 2017
Weighted-average fair value per share granted	$	11.27	$	9.28
Shares issued under the ESPP	0.7		0.6
Weighted-average price per share issued	$	31.29	$	27.97

Stock-based Compensation Expense

Stock-based compensation expense is included in costs and expenses as follows (in millions):



	Three Months Ended
	March 31, 2018		March 31, 2017
Cost of product revenue	$	0.4	$	0.3
Cost of service revenue	2.5		2.3
Research and development	8.4		7.9
Sales and marketing	20.9		19.0
General and administrative	4.3		3.8
Total stock-based compensation expense	$	36.5	$	33.3

The following table summarizes stock-based compensation expense by award type (in millions):



	Three Months Ended
	March 31, 2018		March 31, 2017
RSUs	$	32.0	$	29.0
Stock options	2.0		1.8
ESPP	2.5		2.5
Total stock-based compensation expense	$	36.5	$	33.3

Total income tax benefit associated with stock-based compensation that is recognized in the consolidated statements of operations is as follows (in millions):



	Three Months Ended
	March 31, 2018		March 31, 2017
Income tax benefit associated with stock-based compensation	$	6.0	$	6.6

Share Repurchase Program

In January 2016, our board of directors approved the Share Repurchase Program (the “Repurchase Program”), which authorized the repurchase of up to $200.0 million of our outstanding common stock through December 31, 2017. In 2016 and 2017, our board of directors approved the increases in the aggregate authorized repurchase amount under the Repurchase Program by $100.0 million and $700.0 million, respectively, to a total of $1.0 billion. Under the Repurchase Program, share repurchases may be made by us from time to time in privately negotiated transactions or in open market transactions. The Repurchase Program does not require us to purchase a minimum number of shares, and may be suspended, modified or discontinued at any time without prior notice.

During the three months ended March 31, 2018, we repurchased 2.5 million shares of common stock under the Repurchase Program in open market transactions at an average price of $45.96 per share, for an aggregate purchase price of $115.5 million. As of March 31, 2018, $327.3 million remained available for future share repurchases under the Repurchase Program.

Inventory

3 Months Ended

Mar. 31, 2018

Inventory Disclosure [Abstract]

INVENTORY

Inventory consisted of the following (in millions):



	March 31, 2018		December 31, 2017
Raw materials	$	12.0	$	13.0
Finished goods	68.0		64.3
Inventory	$	80.0	$	77.3

Inventory includes materials at contract manufacturers of $2.0 million and $2.6 million as of March 31, 2018 and December 31, 2017, respectively. Inventory also includes finished goods held by distributors where revenue is recognized on a sell-through basis of $0.1 million as of December 31, 2017.

Revenue Recognition (Tables)

3 Months Ended

Mar. 31, 2018

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following table presents our revenue disaggregated by major product and service lines (in millions):



	Three Months Ended
	March 31, 2018		March 31, 2017 ⁽¹⁾
Product	$	142.8	$	135.3
Service:
Security subscription	136.6		113.5
Technical support	109.6		81.1
Professional services and training	10.0		10.7
Total service revenue	256.2		205.3
Total revenue	$	399.0	$	340.6
⁽¹⁾ As noted above, prior period amounts have not been adjusted under the modified retrospective method.

Impact of Adopting New Accounting Pronouncement

The cumulative effects of the changes made to our January 1, 2018 consolidated balance sheet for the adoption of Topic 606 were as follows (in millions):



	Balance at December 31, 2017			Adjustments due to Topic 606			Balance at January 1, 2018
Assets:
Accounts receivable, net	$	348.2		$	13.6		$	361.8
Inventory	$	77.3		$	(0.1	)	$	77.2
Deferred tax assets	$	146.9		$	(18.0	)	$	128.9
Deferred contract costs	$	—		$	137.1		$	137.1

Liabilities:
Accrued liabilities	$	50.0		$	13.6		$	63.6
Deferred revenue, current	$	793.8		$	0.3		$	794.1
Deferred revenue, non-current	$	542.5		$	(4.4	)	$	538.1
Other liabilities, non-current	$	8.6		$	5.8		$	14.4

Stockholders’ equity:
Accumulated deficit	$	(319.6	)	$	117.3		$	(202.3	)

The following tables summarize the impact of adopting Topic 606 on our condensed consolidated financial statements as of and for the three months ended March 31, 2018 (in millions). These tables do not represent the full condensed consolidated financial statements as they only reflect the accounts impacted by the adoption of Topic 606.

Condensed Consolidated Balance Sheet



	As of March 31, 2018
	As Reported			Balances Without Adoption of Topic 606			Effect of Change Increase (Decrease)
Assets:
Accounts receivable	$	313.1		$	300.2		$	12.9
Inventory	$	80.0		$	81.5		$	(1.5	)
Deferred contract costs	$	148.7		$	—		$	148.7
Deferred tax assets	$	138.7		$	160.6		$	(21.9	)

Liabilities:
Accrued liabilities	$	55.6		$	40.6		$	15.0
Deferred revenue, current	$	817.1		$	828.8		$	(11.7	)
Deferred revenue, non-current	$	579.3		$	580.2		$	(0.9	)
Other liabilities, non-current	$	13.4		$	7.6		$	5.8

Stockholders’ Equity
Accumulated deficit	$	(262.6	)	$	(392.6	)	$	130.0

Condensed Consolidated Statement of Operations



	Three Months Ended March 31, 2018
	As Reported			Balances Without Adoption of Topic 606			Effect of Change Increase (Decrease)
REVENUE:
Product	$	142.8		$	137.1		$	5.7
Service	256.2			255.5			0.7
Total revenue	399.0			392.6			6.4
COSTS OF REVENUE:
Product	58.2			56.7			1.5
GROSS PROFIT:
Product	84.6			80.4			4.2
Service	217.2			216.5			0.7
Total gross profit	301.8			296.9			4.9
OPERATING EXPENSES:
Sales and marketing expenses	185.3			197.0			(11.7		)

OPERATING INCOME	32.4			15.8			16.6

INCOME BEFORE INCOME TAXES	36.7			20.1			16.6
BENEFIT FROM INCOME TAXES	(4.9		)	(8.7		)	3.8
NET INCOME	$	41.6		$	28.8		$	12.8
Net income per share:
Basic	$	0.25		$	0.17		$	0.08
Diluted	$	0.24		$	0.17		$	0.07

Condensed Consolidated Statement of Cash Flows



	Three Months Ended March 31, 2018
	As Reported			Balances Without Adoption of Topic 606			Effect of Change Increase (Decrease)
Cash flows from operating activities:
Net income	$	41.6		$	28.8		$	12.8
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred contract costs	20.8			—			20.8
Other non-cash	0.3			0.9			(0.6		)
Changes in operating assets and liabilities:
Inventory	(7.3		)	(8.7		)	1.4
Deferred contract costs	(32.5		)	—			(32.5		)
Deferred tax assets	(9.6		)	(13.6		)	4.0
Accrued liabilities	(4.7		)	(6.1		)	1.4
Deferred revenue	64.1			71.4			(7.3		)
Net cash provided by operating activities	$	139.7		$	139.7		$	—

Stockholders' Equity , Additional Information Related To ESPP (Details) - Employee Stock Purchase Plan [Member] - $ / shares shares in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted-average fair value per share granted (in dollars per share)	$ 11.27	$ 9.28
Shares issued under the ESPP (in shares)	0.7	0.6
Weighted-average price per share issued (in dollars per share)	$ 31.29	$ 27.97

Revenue Recognition - Cash Flow Statement (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Disaggregation of Revenue [Line Items]
Net income	$ 41.6	$ 10.7
Amortization of deferred contract costs	20.8	0.0
Other non-cash items—net	0.3	1.5
Inventory	(7.3)	(3.5)
Deferred contract costs	(32.5)	0.0
Deferred tax assets	(9.6)	(16.6)
Accrued liabilities	(4.7)	2.9
Deferred revenue	64.1	61.8
Net cash provided by operating activities	139.7	$ 129.7
Balances Without Adoption of Topic 606 \| ASU 2014-09
Disaggregation of Revenue [Line Items]
Net income	28.8
Amortization of deferred contract costs	0.0
Other non-cash items—net	0.9
Inventory	(8.7)
Increase (Decrease) in Deferred Charges	0.0
Deferred tax assets	(13.6)
Accrued liabilities	(6.1)
Deferred revenue	71.4
Net cash provided by operating activities	139.7
Effect of Change Increase (Decrease) \| ASU 2014-09
Disaggregation of Revenue [Line Items]
Net income	12.8
Amortization of deferred contract costs	20.8
Other non-cash items—net	(0.6)
Inventory	1.4
Increase (Decrease) in Deferred Charges	32.5
Deferred tax assets	4.0
Accrued liabilities	1.4
Deferred revenue	(7.3)
Net cash provided by operating activities	$ 0.0

Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Net income	$ 41.6	$ 10.7
Other comprehensive income (loss):
Change in unrealized losses on investments	(1.2)	0.4
Tax provision related to change in unrealized losses on investments	0.0	0.1
Other comprehensive income (loss)	(1.2)	0.3
Comprehensive income	$ 40.4	$ 11.0

Accumulated Other Comprehensive Loss (Tables)

3 Months Ended

Mar. 31, 2018

Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Accumulated Other Comprehensive (Loss) Income

The following table summarizes the changes in accumulated balances of other comprehensive loss (in millions):



	March 31, 2018
	Unrealized Losses on Investments			Tax provision related to unrealized gains or losses on investments		Total
Beginning balance	$	(1.3	)	$	0.5	$	(0.8	)

Other comprehensive loss before reclassifications	(1.2		)	—		(1.2		)
Amounts reclassified from accumulated other comprehensive loss	—			—		—
Net current-period other comprehensive loss	(1.2		)	—		(1.2		)
Ending balance	$	(2.5	)	$	0.5	$	(2.0	)

Financial Instruments and Fair Value , Investments (Details) - USD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 553.3	$ 539.6
Unrealized Gains	0.0	0.0
Unrealized Losses	(2.5)	(1.3)
Fair Value	550.8	538.3
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less Than 12 Months, Fair Value	389.0	400.7
Less Than 12 Months, Unrealized Losses	(1.9)	(0.9)
12 Months or Greater, Fair Value	60.3	69.6
12 Months or Greater, Unrealized Losses	(0.6)	(0.4)
Total, Fair Value	449.3	470.3
Total, Unrealized Losses	(2.5)	(1.3)
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract]
Due within one year	468.3	440.3
Due within one to three years	82.5	98.0
Fair Value	550.8	538.3
Corporate debt securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	372.6	391.0
Unrealized Gains	0.0	0.0
Unrealized Losses	(2.3)	(1.2)
Fair Value	370.3	389.8
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less Than 12 Months, Fair Value	317.7	317.4
Less Than 12 Months, Unrealized Losses	(1.8)	(0.9)
12 Months or Greater, Fair Value	51.9	58.2
12 Months or Greater, Unrealized Losses	(0.5)	(0.3)
Total, Fair Value	369.6	375.6
Total, Unrealized Losses	(2.3)	(1.2)
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract]
Fair Value	370.3	389.8
Commercial paper [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	71.0	74.2
Unrealized Gains	0.0	0.0
Unrealized Losses	0.0	0.0
Fair Value	71.0	74.2
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less Than 12 Months, Fair Value		29.0
Less Than 12 Months, Unrealized Losses		0.0
12 Months or Greater, Fair Value		0.0
12 Months or Greater, Unrealized Losses		0.0
Total, Fair Value		29.0
Total, Unrealized Losses		0.0
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract]
Fair Value	71.0	74.2
Certificates of deposit and term deposits [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	86.2	45.9
Unrealized Gains	0.0	0.0
Unrealized Losses	(0.1)	0.0
Fair Value	86.1	45.9
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less Than 12 Months, Fair Value	56.3	37.2
Less Than 12 Months, Unrealized Losses	(0.1)	0.0
12 Months or Greater, Fair Value	0.0	0.0
12 Months or Greater, Unrealized Losses	0.0	0.0
Total, Fair Value	56.3	37.2
Total, Unrealized Losses	(0.1)	0.0
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract]
Fair Value	86.1	45.9
U.S. government and agency securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	23.5	28.5
Unrealized Gains	0.0	0.0
Unrealized Losses	(0.1)	(0.1)
Fair Value	23.4	28.4
Available-for-sale Securities, Continuous Unrealized Loss Position [Abstract]
Less Than 12 Months, Fair Value	15.0	17.0
Less Than 12 Months, Unrealized Losses	0.0	0.0
12 Months or Greater, Fair Value	8.4	11.4
12 Months or Greater, Unrealized Losses	(0.1)	(0.1)
Total, Fair Value	23.4	28.4
Total, Unrealized Losses	(0.1)	(0.1)
Available-for-sale Securities, Debt Maturities, Fair Value [Abstract]
Fair Value	$ 23.4	$ 28.4

Net Income Per Share , Calculation of Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Earnings Per Share [Line Items]
Net income	$ 41.6	$ 10.7
Basic shares:
Weighted-average common shares outstanding-basic (in shares)	167.7	174.5
Diluted shares:
Weighted-average common shares outstanding-basic (in shares)	167.7	174.5
Effect of potentially dilutive securities:
Weighted-average shares used to compute diluted net income per share (in shares)	171.8	178.3
Basic (in dollars per share)	$ 0.25	$ 0.06
Diluted (in dollars per share)	$ 0.24	$ 0.06
Restricted Stock Units (RSUs) [Member]
Effect of potentially dilutive securities:
Employee stock options and purchase rights (in shares)	2.7	2.2
Stock Options [Member]
Effect of potentially dilutive securities:
Employee stock options and purchase rights (in shares)	1.3	1.5
ESPP [Member]
Effect of potentially dilutive securities:
Employee stock options and purchase rights (in shares)	0.1	0.1

Revenue Recognition

3 Months Ended

Mar. 31, 2018

Revenue from Contract with Customer [Abstract]

Revenue Recognition

REVENUE RECOGNITION

Revenue recognition

On January 1, 2018 we adopted Topic 606 using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported under Topic 605. The details of significant changes and quantitative impact of the changes are discussed below.

We derive the majority of our revenue from sales of our products, FortiGuard security subscription and FortiCare technical support services, and other services. Beginning in 2018, revenues are recognized when control of these goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Prior to 2018, revenue was recognized under Topic 605 when all of the following criteria were met: (i) persuasive evidence of an arrangement existed, (ii) delivery has occurred or services have been rendered, (iii) sales price was fixed or determinable and (iv) collectability was reasonably assured.

Under Topic 606, we determine revenue recognition through the following steps:

•identification of the contract, or contracts, with the customer,

•identification of the performance obligations in the contract,

•determination of the transaction price,

•allocation of the transaction price to the performance obligations in the contract, and

•recognition of revenue when, or as, we satisfy a performance obligation.

Product revenue primarily consists of sales of hardware and software licenses of our FortiGate, FortiSandbox, FortiManager, FortiAnalyzer and other complimentary products. We derive a substantial majority of product sales from our FortiGate products. We previously recognized product revenue for sales to distributors that had no general right of return and direct sales to end-customers upon shipment, based on general revenue recognition accounting guidance once all other revenue recognition criteria were met. Certain distributors are granted stock rotation rights, limited rights of return or rebates for sales of our products. The arrangement fee for this group of distributors was not fixed or determinable when products were shipped and revenue was therefore deferred and recognized upon sell-through. For sales that included end-customer acceptance criteria, revenue was recognized upon acceptance. Under Topic 606, we recognize product revenue upon shipment when control of the promised goods is transferred to the customer. We recognize revenue from time-based software licenses upon electronic transfer of the license key to the customer. Previously time-based software licenses were recognized over the license term.

We generally provide a 1-year warranty on hardware products and a 90-day warranty on software that provides assurance that our hardware or software products conform to published specifications. Such assurance-type warranties are not deemed to be separate performance obligations from the hardware or software product and costs associated with providing the warranties are accrued in accordance with ASC 460-10.

Service revenue relates to sales of our FortiGuard security subscription, FortiCare technical support services, and other services. Our FortiGuard security subscription services provide access to our antivirus, intrusion prevention, web filtering and anti-spam functionality. Our FortiCare support services include rights to unspecified software upgrades, maintenance releases and patches, telephone and internet access to technical support personnel. Our typical subscription and contractual support term is one to three years, and to a lesser extent, five years. Our revenue recognition for service arrangements did not change under Topic 606. We continue to recognize revenue from these arrangements ratably over the contractual service period because of continuous transfer of control to the customer. Revenue related to subsequent renewals of these services are recognized over the term of the renewal agreement. We also generate a small portion of our revenue from other services consisting of professional services, training and software-as-a-service (“SaaS”) which is either hosted or cloud-based services. We recognize revenue from professional and training services as the services are provided. We recognize revenue from SaaS as the subscription service is delivered over the term, which is typically one year, or on a monthly usage basis. Our revenue recognition for other services did not change under Topic 606. To date, SaaS revenue has not represented a significant percentage of our total revenue.

Our sales arrangements typically contain multiple performance obligations, such as hardware, software license, security subscription, technical support services and other services, which are generally capable of being distinct and accounted for as separate performance obligations. We allocate the transaction price to each performance obligation based on relative standalone selling price. We determine standalone selling price based on the historical pricing and discounting practices for those services when sold separately. We determine standalone selling price for a product or service by considering multiple historical factors including, but not limited to, cost of products, gross margin objectives, pricing practices, geographies and the term of the service contract that fall within a reasonably range as a percentage of list price. Revenue is reported net of sales taxes.

Under Topic 605, our products and services in a multiple-element arrangement generally qualified as separate units of accounting. We allocated revenue to each unit of accounting based on an estimated selling price using vendor-specific objective evidence (“VSOE”) of selling price, if it existed, or third-party evidence (“TPE”) of selling price. If neither VSOE nor TPE of selling price existed for a deliverable, we used our best estimate of selling price for that deliverable. For multiple-element arrangements where software deliverables were included, revenue was allocated to the non-software deliverables and to the software deliverables as a group using the relative estimated selling prices of each of the deliverables in the arrangement based on the estimated selling price hierarchy. The amount allocated to the software deliverables was then allocated to each software deliverable using the residual method when VSOE of fair value existed. If evidence of VSOE of fair value of one or more undelivered elements did not exist, all software allocated revenue was deferred and recognized when delivery of those elements occurred or when fair value was established. When the undelivered element for which we did not have VSOE of fair value was support, revenue for the entire arrangement was recognized ratably over the support period. The same residual method and VSOE of fair value principles applied for our multiple element arrangements that contained only software elements.

In certain circumstances, our contracts include provisions for sales rebates and other customer incentive programs. Additionally, in limited circumstances, we may permit end-customers, distributors and resellers to return our products, subject to varying limitations, for a refund within a reasonably short period from the date of purchase. These amounts are accounted for as variable consideration that can decrease the transaction price. We estimate variable consideration at the most likely amounts to which we expect our customers to be entitled. We include estimated amounts in the transaction price to the extent that it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimate for sales return reserve was $12.9 million as of March 31, 2018 and is included in current liabilities in our condensed consolidated balance sheet. Under Topic 605, a sales return reserve of $13.6 million was presented as a reduction to accounts receivable as of December 31, 2017.

We generally invoice at the time of our sale for the total price of the products and security and technical support and other services, and the invoice is payable within 30 to 90 days. We also invoice certain software licenses and services on a monthly basis. Amounts billed and due from our customers are classified as receivables on the balance sheet and do not bear interest. We record deferred revenue when cash payments are received or due in advance of our performance.

During the three months ended March 31, 2018, we recognized $239.1 million in revenue that was included in the deferred revenue balance as of December 31, 2017.

Shipping and handling fees charged to our customers are recognized as product revenue in the period shipped and the related costs for providing these services are recorded as a cost of sale. Shipping and handling fees recognized as product revenue were not significant during the three months ended March 31, 2018 and 2017.

Disaggregation of Revenue

The following table presents our revenue disaggregated by major product and service lines (in millions):



	Three Months Ended
	March 31, 2018		March 31, 2017 ⁽¹⁾
Product	$	142.8	$	135.3
Service:
Security subscription	136.6		113.5
Technical support	109.6		81.1
Professional services and training	10.0		10.7
Total service revenue	256.2		205.3
Total revenue	$	399.0	$	340.6
⁽¹⁾ As noted above, prior period amounts have not been adjusted under the modified retrospective method.

Transaction Price Allocated to the Remaining Performance Obligations

As of March 31, 2018, we had $1.40 billion in remaining performance obligations, which is substantially comprised of deferred security subscription and technical support services not yet delivered. We expect to recognize revenue on approximately 75% of these remaining performance obligations over the next one to two years, with the remaining balance to be recognized in three to five years.

Accounts Receivable

Trade accounts receivable are recorded at the invoiced amount. Trade accounts receivable is reduced by allowance for doubtful accounts which is determined based on our assessment of the collectability of customer accounts. The allowance for doubtful accounts was $0.7 million and $0.9 million as of March 31, 2018 and December 31, 2017, respectively. As of December 31, 2017, accounts receivable was also reduced by sales return reserve of $13.6 million which we reclassified to accrued liabilities account as of January 1, 2018 in accordance with the adoption of Topic 606.

Contract Assets

Contract assets represent amounts that have been recognized as revenue but for which we did not have the unconditional right to invoice the customer. We did not have contract assets as of March 31, 2018 and January 1, 2018.

Deferred Contract Costs

Sales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions for the sale of products are recognized at the time of sale. Sales commissions for initial service contracts are deferred and then amortized as an expense on a straight-line basis over the period of benefit which we have determined to be five years. We determined the period of benefit taking into consideration our customer contracts, our technology and other factors. Sales commissions for renewal contracts are deferred and then amortized on a straight line basis over the contractual period of the underlying contracts which ranges from one to three years and, to a lesser extent, five years. The amortization of deferred commissions is included in sales and marketing expense in our condensed consolidated statement of operations. Amortization of deferred contract costs during the three months ended March 31, 2018 was $20.8 million. No impairment loss was recognized during the three months ended March 31, 2018.

Practical Expedient

We elected to use the contract modification practical expedient. This practical expedient allows for all contract modifications before January 1, 2018 to be aggregated and evaluated at adoption date.

Impact on Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheet



	As of March 31, 2018
	As Reported			Balances Without Adoption of Topic 606			Effect of Change Increase (Decrease)
Assets:
Accounts receivable	$	313.1		$	300.2		$	12.9
Inventory	$	80.0		$	81.5		$	(1.5	)
Deferred contract costs	$	148.7		$	—		$	148.7
Deferred tax assets	$	138.7		$	160.6		$	(21.9	)

Liabilities:
Accrued liabilities	$	55.6		$	40.6		$	15.0
Deferred revenue, current	$	817.1		$	828.8		$	(11.7	)
Deferred revenue, non-current	$	579.3		$	580.2		$	(0.9	)
Other liabilities, non-current	$	13.4		$	7.6		$	5.8

Stockholders’ Equity
Accumulated deficit	$	(262.6	)	$	(392.6	)	$	130.0

Condensed Consolidated Statement of Operations



	Three Months Ended March 31, 2018
	As Reported			Balances Without Adoption of Topic 606			Effect of Change Increase (Decrease)
REVENUE:
Product	$	142.8		$	137.1		$	5.7
Service	256.2			255.5			0.7
Total revenue	399.0			392.6			6.4
COSTS OF REVENUE:
Product	58.2			56.7			1.5
GROSS PROFIT:
Product	84.6			80.4			4.2
Service	217.2			216.5			0.7
Total gross profit	301.8			296.9			4.9
OPERATING EXPENSES:
Sales and marketing expenses	185.3			197.0			(11.7		)

OPERATING INCOME	32.4			15.8			16.6

INCOME BEFORE INCOME TAXES	36.7			20.1			16.6
BENEFIT FROM INCOME TAXES	(4.9		)	(8.7		)	3.8
NET INCOME	$	41.6		$	28.8		$	12.8
Net income per share:
Basic	$	0.25		$	0.17		$	0.08
Diluted	$	0.24		$	0.17		$	0.07

Condensed Consolidated Statement of Cash Flows



	Three Months Ended March 31, 2018
	As Reported			Balances Without Adoption of Topic 606			Effect of Change Increase (Decrease)
Cash flows from operating activities:
Net income	$	41.6		$	28.8		$	12.8
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred contract costs	20.8			—			20.8
Other non-cash	0.3			0.9			(0.6		)
Changes in operating assets and liabilities:
Inventory	(7.3		)	(8.7		)	1.4
Deferred contract costs	(32.5		)	—			(32.5		)
Deferred tax assets	(9.6		)	(13.6		)	4.0
Accrued liabilities	(4.7		)	(6.1		)	1.4
Deferred revenue	64.1			71.4			(7.3		)
Net cash provided by operating activities	$	139.7		$	139.7		$	—

Stockholders' Equity , ESPP Information (Details) - Employee Stock Purchase Plan [Member]	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term in years	6 months	6 months
Volatility	27.00%	33.00%
Risk-free interest rate	1.80%	0.70%
Dividend rate	0.00%	0.00%

Defined Contribution Plans	3 Months Ended
Defined Contribution Plans	Mar. 31, 2018
Retirement Benefits [Abstract]
DEFINED CONTRIBUTION PLANS	DEFINED CONTRIBUTION PLANS Our tax-deferred savings plan under our 401(k) Plan, permits participating employees to defer a portion of their pre-tax earnings. In Canada, we have a Group Registered Retirement Savings Plan Program (the “RRSP”), which permits participants to make tax deductible contributions. Our board of directors approved 50% matching contributions on employee contributions up to 4% of each employee’s eligible earnings. Our matching contributions to our 401(k) Plan and the RRSP for the three months ended March 31, 2018 and March 31, 2017 were $1.5 million and $1.3 million, respectively.

Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
REVENUE:
Product	$ 142.8	$ 135.3
Service	256.2	205.3
Total revenue	399.0	340.6
COST OF REVENUE:
Product	58.2	55.3
Service	39.0	35.3
Total cost of revenue	97.2	90.6
GROSS PROFIT:
Product	84.6	80.0
Service	217.2	170.0
Total gross profit	301.8	250.0
OPERATING EXPENSES:
Research and development	59.1	51.2
Sales and marketing	185.3	170.4
General and administrative	25.0	22.6
Restructuring charges	0.0	0.4
Total operating expenses	269.4	244.6
OPERATING INCOME	32.4	5.4
INTEREST INCOME	4.5	2.4
OTHER INCOME (EXPENSE)—NET	(0.2)	0.3
INCOME BEFORE INCOME TAXES	36.7	8.1
BENEFIT FROM INCOME TAXES	(4.9)	(2.6)
NET INCOME	$ 41.6	$ 10.7
Net income per share (Note 8):
Basic (in dollars per share)	$ 0.25	$ 0.06
Diluted (in dollars per share)	$ 0.24	$ 0.06
Weighted-average shares outstanding:
Basic (in shares)	167.7	174.5
Diluted (in shares)	171.8	178.3

Revenue Recognition - Performance Obligation Satisfaction Period (Details)	3 Months Ended
	Mar. 31, 2018
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation expected to be satisfied (percent)	75.00%
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligation expected to be satisfied (percent)	25.00%
Maximum [Member] \| Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligation expected recognition period for three-fourths of remaining obligation	2 years
Maximum [Member] \| Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligation expected recognition period for three-fourths of remaining obligation	3 years
Minimum [Member] \| Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligation expected recognition period for three-fourths of remaining obligation	1 year
Minimum [Member] \| Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Performance obligation expected recognition period for three-fourths of remaining obligation	1 year

Net Income Per Share

3 Months Ended

Mar. 31, 2018

Earnings Per Share [Abstract]

NET INCOME PER SHARE

Basic net income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share is computed by dividing net income by the weighted-average number of shares of common stock outstanding during the period, plus the dilutive effects of RSUs, stock options and the ESPP. Dilutive shares of common stock are determined by applying the treasury stock method.

A reconciliation of the numerator and denominator used in the calculation of basic and diluted net income per share is as follows (in millions, except per share amounts):



	Three Months Ended
	March 31, 2018		March 31, 2017
Numerator:
Net income	$	41.6	$	10.7

Denominator:
Basic shares:
Weighted-average common stock outstanding-basic	167.7		174.5
Diluted shares:
Weighted-average common stock outstanding-basic	167.7		174.5
Effect of potentially dilutive securities:
RSUs	2.7		2.2
Stock options	1.3		1.5
ESPP	0.1		0.1
Weighted-average shares used to compute diluted net income per share	171.8		178.3
Net income per share:
Basic	$	0.25	$	0.06
Diluted	$	0.24	$	0.06



	Three Months Ended
	March 31, 2018	March 31, 2017
RSUs	1.1	2.5
Stock options	0.5	1.1
ESPP	0.2	0.3
	1.8	3.9

Income Taxes	3 Months Ended
Income Taxes	Mar. 31, 2018
Income Tax Disclosure [Abstract]
INCOME TAXES	INCOME TAXES Our effective tax rate was a tax benefit of 13% for the three months ended March 31, 2018, compared to a tax benefit of 32% for the same period last year, with the primary difference being the change in the federal tax rate to 21% in 2018 from 35% in the prior year. The effective tax rates for the periods presented are comprised of U.S. federal and state taxes, withholding taxes and foreign taxes of $8.5 million, which are offset by a tax provision benefit of $5.6 million for stock-based compensation and release of reserve on uncertain tax position including interests of $7.8 million. The tax rate for the three months ended March 31, 2017 was comprised of the U.S. federal and state taxes, withholding taxes and foreign taxes of $2.9 million, which were offset by a tax provision benefit of $5.5 million for stock compensation. As of March 31, 2018 and December 31, 2017, unrecognized tax benefits were $77.6 million and $72.5 million, respectively. The amount of $76.2 million in unrecognized tax benefits, if recognized, would favorably affect our effective tax rate. It is our policy is to include accrued interest and penalties related to uncertain tax benefits in income tax expense. As of March 31, 2018 and December 31, 2017, accrued interest and penalties were $13.4 million and $13.5 million, respectively. It is reasonably possible that our gross unrecognized tax benefits will decrease by up to $7.0 million in the next 12 months, primarily due to the lapse of the statute of limitations and an audit settlement. These adjustments, if recognized, would positively impact our effective tax rate, and would be recognized as additional tax benefits. We file income tax returns in the U.S. federal jurisdiction and in various U.S. state and foreign jurisdictions. Generally, we are no longer subject to U.S. state and non-U.S. income tax examinations by tax authorities for tax years prior to 2008. We are no longer subject to examination by U.S federal income tax authorities for tax years prior to 2015. We have closed the Internal Revenue Service audit for tax years 2012, 2013 and 2014. In March 2018, we received a refund of $6.8 million for a carry-back claim approved in this audit. The tax authorities in France are examining the intercompany relationship between Fortinet, Inc., Fortinet France and Fortinet Singapore. In May 2017, we received a notice from the French tax authorities that an audit was officially opened for tax years from 2007 to 2015. The tax authorities in Israel have notified us that we will be audited for tax years from 2008 to 2014.

Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Compensation, Restricted Stock Units Award Activity

The following table summarizes the activity and related information for RSUs for the periods presented below (in millions, except per share amounts):



	Restricted Stock Units Outstanding
	Number of Shares		Weighted-Average Grant Date Fair Value per Share
Balance—December 31, 2017	8.5		$	34.79
Granted	2.5		49.05
Forfeited	(0.3	)	35.63
Vested	(1.4	)	34.15
Balance—March 31, 2018	9.3		$	38.86

Schedule of Share-based Compensation, Shares Withheld for Taxes

The following summarizes the number and value of the shares withheld for employee taxes (in millions):



	Three Months Ended
	March 31, 2018		March 31, 2017
Shares withheld for taxes	0.4		0.4
Amount withheld for taxes	$	19.2	$	13.7

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The following table summarizes the weighted-average assumptions relating to our employee stock options:



	Three Months Ended
	March 31, 2018		March 31, 2017
Expected term in years	4.4		4.4
Volatility	32	%	36	%
Risk-free interest rate	2.6	%	1.9	%
Dividend rate	—	%	—	%

Schedule of Share-based Compensation, Stock Options, Activity

The following table summarizes the stock option activity and related information for the periods presented below (in millions, except exercise prices and contractual life):



	Options Outstanding
	Number of Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Balance—December 31, 2017	4.3		$	27.50
Granted	0.7		49.06
Forfeited	(0.1	)	30.02
Exercised	(1.0	)	23.94
Balance—March 31, 2018	3.9		$	32.16
Options vested and expected to vest—March 31, 2018	3.9		$	32.16	4.03	$	83.4
Options exercisable—March 31, 2018	2.1		$	27.12	2.52	$	56.3

Schedule of Share-based Compensation, Stock Options, Activity, Additional Information

Additional information related to our stock options is summarized below (in millions, except per share amounts):



	Three Months Ended
	March 31, 2018		March 31, 2017
Weighted-average fair value per share granted	$	15.02	$	12.22
Intrinsic value of options exercised	23.7		17.9
Fair value of options vested	2.8		3.4

Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions

In determining the fair value of the ESPP, we use the Black-Scholes option pricing model that employs the following weighted-average assumptions:



	Three Months Ended
	March 31, 2018		March 31, 2017
Expected term in years	0.5		0.5
Volatility	27	%	33	%
Risk-free interest rate	1.8	%	0.7	%
Dividend rate	—	%	—	%

Schedule of Share-based Payment Award Employee Stock Purchase Plan Additional Information

Additional information related to the ESPP is provided below (in millions, except per share amounts):



	Three Months Ended
	March 31, 2018		March 31, 2017
Weighted-average fair value per share granted	$	11.27	$	9.28
Shares issued under the ESPP	0.7		0.6
Weighted-average price per share issued	$	31.29	$	27.97

Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs

Stock-based compensation expense is included in costs and expenses as follows (in millions):



	Three Months Ended
	March 31, 2018		March 31, 2017
Cost of product revenue	$	0.4	$	0.3
Cost of service revenue	2.5		2.3
Research and development	8.4		7.9
Sales and marketing	20.9		19.0
General and administrative	4.3		3.8
Total stock-based compensation expense	$	36.5	$	33.3

Schedule of Employee Service Share based Compensation Allocation of Recognized Period Costs by Award Type

The following table summarizes stock-based compensation expense by award type (in millions):



	Three Months Ended
	March 31, 2018		March 31, 2017
RSUs	$	32.0	$	29.0
Stock options	2.0		1.8
ESPP	2.5		2.5
Total stock-based compensation expense	$	36.5	$	33.3

Income Tax Benefit from Stock Option Plans

Total income tax benefit associated with stock-based compensation that is recognized in the consolidated statements of operations is as follows (in millions):



	Three Months Ended
	March 31, 2018		March 31, 2017
Income tax benefit associated with stock-based compensation	$	6.0	$	6.6

Inventory (Tables)

3 Months Ended

Mar. 31, 2018

Inventory Disclosure [Abstract]

Inventory

Inventory consisted of the following (in millions):



	March 31, 2018		December 31, 2017
Raw materials	$	12.0	$	13.0
Finished goods	68.0		64.3
Inventory	$	80.0	$	77.3

Stockholders' Equity (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Expected term in years	4 years 4 months 24 days	4 years 4 months 24 days
Volatility	32.00%	36.00%
Risk-free interest rate	2.60%	1.90%
Dividend rate	0.00%	0.00%
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Balance - Beginning (in shares)	4.3
Granted (in shares)	0.7
Forfeited (in shares)	(0.1)
Exercised (in shares)	(1.0)
Balance - Ending (in shares)	3.9
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Balance - Beginning (in dollars per share)	$ 27.50
Granted (in dollars per share)	49.06
Forfeited (in dollars per share)	30.02
Exercised (in dollars per share)	23.94
Balance - Ending (in dollars per share)	$ 32.16
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Options vested and expected to vest, Outstanding (in shares)	3.9
Options vested and expected to vest, Weighted average exercise price (in dollars per share)	$ 32.16
Options vested and expected to vest, Weighted average remaining contractual life (in years)	4 years 11 days
Options vested and expected to vest, Aggregate intrinsic value	$ 83.4
Options exercisable, Outstanding (in shares)	2.1
Options exercisable, Weighted average exercise price (in dollars per share)	$ 27.12
Options exercisable, Weighted average remaining contractual life (in years)	2 years 6 months 7 days
Options exercisable, Aggregate intrinsic value	$ 56.3
Compensation cost not yet recognized	$ 20.8
Compensation cost not yet recognized period of recognition	2 years 11 months 25 days
Weighted-average fair value per share granted	$ 15.02	$ 12.22
Intrinsic value of options exercised	$ 23.7	$ 17.9
Total fair value of awards vested	$ 2.8	$ 3.4
Stock-based Compensation Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Remaining shares available for grant under the plans	55.2
Share Repurchase Program [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock repurchase program, remaining repurchase amount	$ 327.3

Property and Equipment—Net (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Property, Plant and Equipment, Net, by Type [Abstract]
Total property and equipment	$ 346.7		$ 340.6
Less: accumulated depreciation	(101.6)		(95.2)
Property and equipment - net	245.1		245.4
Depreciation expense	11.4	$ 11.2
Building and building improvements [Member]
Property, Plant and Equipment, Net, by Type [Abstract]
Total property and equipment	135.2		133.2
Computer equipment and software [Member]
Property, Plant and Equipment, Net, by Type [Abstract]
Total property and equipment	86.9		79.9
Land [Member]
Property, Plant and Equipment, Net, by Type [Abstract]
Total property and equipment	65.6		65.6
Leasehold improvements and tooling [Member]
Property, Plant and Equipment, Net, by Type [Abstract]
Total property and equipment	21.5		20.8
Evaluation units [Member]
Property, Plant and Equipment, Net, by Type [Abstract]
Total property and equipment	19.2		20.1
Furniture and fixtures [Member]
Property, Plant and Equipment, Net, by Type [Abstract]
Total property and equipment	15.4		14.7
Construction-in-progress [Member]
Property, Plant and Equipment, Net, by Type [Abstract]
Total property and equipment	$ 2.9		$ 6.3

Revenue Recognition - Balance Sheet (Details) - USD ($) $ in Millions	Mar. 31, 2018	Jan. 01, 2018	Dec. 31, 2017
Disaggregation of Revenue [Line Items]
Accounts receivable—Net	$ 313.1		$ 348.2
Inventory	80.0		77.3
Deferred contract costs	148.7		0.0
DEFERRED TAX ASSETS	138.7		146.9
Accrued liabilities	55.6		50.0
Deferred revenue	817.1		793.8
DEFERRED REVENUE	579.3		542.5
OTHER LIABILITIES	13.4		8.6
Accumulated deficit	(262.6)		(319.6)
ASU 2014-09
Disaggregation of Revenue [Line Items]
Accounts receivable—Net		$ 361.8
Inventory		77.2
Deferred contract costs		137.1
DEFERRED TAX ASSETS		128.9
Accrued liabilities		63.6
Deferred revenue		794.1
DEFERRED REVENUE		538.1
OTHER LIABILITIES		14.4
Accumulated deficit		(202.3)
Balances Without Adoption of Topic 606
Disaggregation of Revenue [Line Items]
Accounts receivable—Net			348.2
Inventory			77.3
Deferred contract costs			0.0
DEFERRED TAX ASSETS			146.9
Accrued liabilities			50.0
Deferred revenue			793.8
DEFERRED REVENUE			542.5
OTHER LIABILITIES			8.6
Accumulated deficit			$ (319.6)
Balances Without Adoption of Topic 606 \| ASU 2014-09
Disaggregation of Revenue [Line Items]
Accounts receivable—Net	300.2
Inventory	81.5
Deferred contract costs	0.0
DEFERRED TAX ASSETS	160.6
Accrued liabilities	40.6
Deferred revenue	828.8
DEFERRED REVENUE	580.2
OTHER LIABILITIES	7.6
Accumulated deficit	(392.6)
Effect of Change Increase (Decrease) \| ASU 2014-09
Disaggregation of Revenue [Line Items]
Accounts receivable—Net	12.9	13.6
Inventory	(1.5)	(0.1)
Deferred contract costs	148.7	137.1
DEFERRED TAX ASSETS	(21.9)	(18.0)
Accrued liabilities	15.0	13.6
Deferred revenue	(11.7)	0.3
DEFERRED REVENUE	(0.9)	(4.4)
OTHER LIABILITIES	5.8
Accumulated deficit	$ 130.0	$ 117.3

Commitments and Contingencies (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Commitments and Contingencies Disclosure [Abstract]
Rent expense	$ 4.1	$ 4.5
Inventory purchase commitments	106.1
Other contractual commitments and open purchase orders	$ 10.0

Property and Equipment—Net (Tables)

3 Months Ended

Mar. 31, 2018

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment - Net

Property and equipment—net consisted of the following (in millions):



	March 31, 2018			December 31, 2017
Building and building improvements	$	135.2		$	133.2
Computer equipment and software	86.9			79.9
Land	65.6			65.6
Leasehold improvements	21.5			20.8
Evaluation units	19.2			20.1
Furniture and fixtures	15.4			14.7
Construction-in-progress	2.9			6.3
Total property and equipment	346.7			340.6
Less: accumulated depreciation	(101.6		)	(95.2		)
Property and equipment—net	$	245.1		$	245.4

Net Income Per Share , Anti Dilutive Securities (Details) - shares shares in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities (in shares)	1.8	3.9
Restricted Stock Units (RSUs) [Member] \| Stock Compensation Plan [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities (in shares)	1.1	2.5
Stock Options [Member] \| Stock Compensation Plan [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities (in shares)	0.5	1.1
ESPP [Member] \| Stock Compensation Plan [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities (in shares)	0.2	0.3

Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Contractual Obligation, Fiscal Year Maturity Schedule

The following table summarizes our future principal contractual obligations as of March 31, 2018 (in millions):



	Total		2018 (remainder)		2019		2020		2021		2022		Thereafter
Operating lease commitments	$	55.4	$	12.6	$	13.9	$	10.7	$	6.8	$	4.2	$	7.2
Inventory purchase commitments	106.1		101.9		—		4.2		—		—		—
Total	$	161.5	$	114.5	$	13.9	$	14.9	$	6.8	$	4.2	$	7.2

Summary of Significant Accounting Policies , Recent Accounting Pronouncements (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Mar. 31, 2018	Jan. 01, 2018	Dec. 31, 2017
New Accounting Pronouncement, Early Adoption [Line Items]
Accounts receivable—Net		$ 313.1		$ 348.2
Inventory		80.0		77.3
Deferred tax assets		138.7		146.9
Deferred contract costs		148.7		0.0
Accrued liabilities		55.6		50.0
Deferred revenue		817.1		793.8
DEFERRED REVENUE		579.3		542.5
OTHER LIABILITIES		13.4		8.6
Retained earnings		(262.6)		(319.6)
ASU 2014-09
New Accounting Pronouncement, Early Adoption [Line Items]
Accounts receivable—Net			$ 361.8
Inventory			77.2
Deferred tax assets			128.9
Deferred contract costs			137.1
Accrued liabilities			63.6
Deferred revenue			794.1
DEFERRED REVENUE			538.1
OTHER LIABILITIES			14.4
Retained earnings			(202.3)
Deferred tax liability			23.8
Minimum [Member] \| Scenario, Forecast [Member] \| ASU 2016-02
New Accounting Pronouncement, Early Adoption [Line Items]
Expected increase to assets and liabilities upon adoption of new accounting pronouncement	$ 45.0
Deferred Tax Asset [Member] \| ASU 2014-09
New Accounting Pronouncement, Early Adoption [Line Items]
Deferred tax liability			18.0
Effect of Change Increase (Decrease) \| ASU 2014-09
New Accounting Pronouncement, Early Adoption [Line Items]
Accounts receivable—Net		12.9	13.6
Inventory		(1.5)	(0.1)
Deferred tax assets		(21.9)	(18.0)
Deferred contract costs		148.7	137.1
Accrued liabilities		15.0	13.6
Deferred revenue		(11.7)	0.3
DEFERRED REVENUE		(0.9)	(4.4)
OTHER LIABILITIES		5.8
Retained earnings		130.0	117.3
Deferred Revenue			4.1
Effect of Change Increase (Decrease) \| Other Noncurrent Liabilities [Member] \| ASU 2014-09
New Accounting Pronouncement, Early Adoption [Line Items]
OTHER LIABILITIES			$ 5.8
Balances Without Adoption of Topic 606
New Accounting Pronouncement, Early Adoption [Line Items]
Accounts receivable—Net				348.2
Inventory				77.3
Deferred tax assets				146.9
Deferred contract costs				0.0
Accrued liabilities				50.0
Deferred revenue				793.8
DEFERRED REVENUE				542.5
OTHER LIABILITIES				8.6
Retained earnings				$ (319.6)
Balances Without Adoption of Topic 606 \| ASU 2014-09
New Accounting Pronouncement, Early Adoption [Line Items]
Accounts receivable—Net		300.2
Inventory		81.5
Deferred tax assets		160.6
Deferred contract costs		0.0
Accrued liabilities		40.6
Deferred revenue		828.8
DEFERRED REVENUE		580.2
OTHER LIABILITIES		7.6
Retained earnings		$ (392.6)

Goodwill and Other Intangible Assets - Net (Tables)

3 Months Ended

Mar. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived and Indefinite-Lived Intangible Assets by Major Class

The following tables present other intangible assets—net as of March 31, 2018 and December 31, 2017 (in millions, except years):



	March 31, 2018
	Weighted-Average Useful Life (in Years)	Gross		Accumulated Amortization		Net
Other intangible assets—net:
Finite-lived intangible assets:
Developed technologies and other	3.8	$	25.6	$	15.0	$	10.6
Customer relationships	4.7	14.5		10.6		3.9
		$	40.1	$	25.6	$	14.5



	December 31, 2017
	Weighted-Average Useful Life (in Years)	Gross		Accumulated Amortization		Net
Other intangible assets—net:
Finite-lived intangible assets:
Developed technologies and other	3.8	$	24.0	$	13.7	$	10.3
Customer relationships	4.7	14.5		10.1		4.4
		38.5		23.8		14.7

Indefinite-lived intangible assets:
In-process research and development		1.6		—		1.6
Total other intangible assets—net		$	40.1	$	23.8	$	16.3

ears):



	March 31, 2018
	Weighted-Average Useful Life (in Years)	Gross		Accumulated Amortization		Net
Other intangible assets—net:
Finite-lived intangible assets:
Developed technologies and other	3.8	$	25.6	$	15.0	$	10.6
Customer relationships	4.7	14.5		10.6		3.9
		$	40.1	$	25.6	$	14.5

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

The following table summarizes estimated future amortization expense of finite-lived intangible assets—net (in millions):



	Amount
Years:
2018	$	5.4
2019	5.8
2020	2.8
2021 and thereafter	0.5
Total	$	14.5

Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Impact of Adopting New Accounting Pronouncement

The cumulative effects of the changes made to our January 1, 2018 consolidated balance sheet for the adoption of Topic 606 were as follows (in millions):



	Balance at December 31, 2017			Adjustments due to Topic 606			Balance at January 1, 2018
Assets:
Accounts receivable, net	$	348.2		$	13.6		$	361.8
Inventory	$	77.3		$	(0.1	)	$	77.2
Deferred tax assets	$	146.9		$	(18.0	)	$	128.9
Deferred contract costs	$	—		$	137.1		$	137.1

Liabilities:
Accrued liabilities	$	50.0		$	13.6		$	63.6
Deferred revenue, current	$	793.8		$	0.3		$	794.1
Deferred revenue, non-current	$	542.5		$	(4.4	)	$	538.1
Other liabilities, non-current	$	8.6		$	5.8		$	14.4

Stockholders’ equity:
Accumulated deficit	$	(319.6	)	$	117.3		$	(202.3	)

Condensed Consolidated Balance Sheet



	As of March 31, 2018
	As Reported			Balances Without Adoption of Topic 606			Effect of Change Increase (Decrease)
Assets:
Accounts receivable	$	313.1		$	300.2		$	12.9
Inventory	$	80.0		$	81.5		$	(1.5	)
Deferred contract costs	$	148.7		$	—		$	148.7
Deferred tax assets	$	138.7		$	160.6		$	(21.9	)

Liabilities:
Accrued liabilities	$	55.6		$	40.6		$	15.0
Deferred revenue, current	$	817.1		$	828.8		$	(11.7	)
Deferred revenue, non-current	$	579.3		$	580.2		$	(0.9	)
Other liabilities, non-current	$	13.4		$	7.6		$	5.8

Stockholders’ Equity
Accumulated deficit	$	(262.6	)	$	(392.6	)	$	130.0

Condensed Consolidated Statement of Operations



	Three Months Ended March 31, 2018
	As Reported			Balances Without Adoption of Topic 606			Effect of Change Increase (Decrease)
REVENUE:
Product	$	142.8		$	137.1		$	5.7
Service	256.2			255.5			0.7
Total revenue	399.0			392.6			6.4
COSTS OF REVENUE:
Product	58.2			56.7			1.5
GROSS PROFIT:
Product	84.6			80.4			4.2
Service	217.2			216.5			0.7
Total gross profit	301.8			296.9			4.9
OPERATING EXPENSES:
Sales and marketing expenses	185.3			197.0			(11.7		)

OPERATING INCOME	32.4			15.8			16.6

INCOME BEFORE INCOME TAXES	36.7			20.1			16.6
BENEFIT FROM INCOME TAXES	(4.9		)	(8.7		)	3.8
NET INCOME	$	41.6		$	28.8		$	12.8
Net income per share:
Basic	$	0.25		$	0.17		$	0.08
Diluted	$	0.24		$	0.17		$	0.07

Condensed Consolidated Statement of Cash Flows



	Three Months Ended March 31, 2018
	As Reported			Balances Without Adoption of Topic 606			Effect of Change Increase (Decrease)
Cash flows from operating activities:
Net income	$	41.6		$	28.8		$	12.8
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred contract costs	20.8			—			20.8
Other non-cash	0.3			0.9			(0.6		)
Changes in operating assets and liabilities:
Inventory	(7.3		)	(8.7		)	1.4
Deferred contract costs	(32.5		)	—			(32.5		)
Deferred tax assets	(9.6		)	(13.6		)	4.0
Accrued liabilities	(4.7		)	(6.1		)	1.4
Deferred revenue	64.1			71.4			(7.3		)
Net cash provided by operating activities	$	139.7		$	139.7		$	—

Financial Instruments and Fair Value (Tables)

3 Months Ended

Mar. 31, 2018

Financial Instruments and Fair Value [Abstract]

Summary of Investments

The following tables summarize our investments (in millions):



	March 31, 2018
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Corporate debt securities	$	372.6	$	—	$	(2.3	)	$	370.3
Certificates of deposit and term deposits ⁽¹⁾	86.2		—		(0.1		)	86.1
Commercial paper	71.0		—		—			71.0
U.S. government and agency securities	23.5		—		(0.1		)	23.4
Total available-for-sale securities	$	553.3	$	—	$	(2.5	)	$	550.8

	December 31, 2017
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Corporate debt securities	$	391.0	$	—	$	(1.2	)	$	389.8
Commercial paper	74.2		—		—			74.2
Certificates of deposit and term deposits ⁽¹⁾	45.9		—		—			45.9
U.S. government and agency securities	28.5		—		(0.1		)	28.4
Total available-for-sale securities	$	539.6	$	—	$	(1.3	)	$	538.3
(1) The majority of our certificates of deposit and term deposits are foreign deposits.

Schedule of Unrealized Loss on Investments

The following tables show the gross unrealized losses and the related fair values of our investments that have been in a continuous unrealized loss position (in millions):



	March 31, 2018
	Less Than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Corporate debt securities	$	317.7	$	(1.8	)	$	51.9	$	(0.5	)	$	369.6	$	(2.3	)
Certificates of deposit and term deposits	56.3		(0.1		)	—		—			56.3		(0.1		)
U.S. government and agency securities	15.0		—			8.4		(0.1		)	23.4		(0.1		)
Total available-for-sale securities	$	389.0	$	(1.9	)	$	60.3	$	(0.6	)	$	449.3	$	(2.5	)



	December 31, 2017
	Less Than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Corporate debt securities	$	317.4	$	(0.9	)	$	58.2	$	(0.3	)	$	375.6	$	(1.2	)
Certificates of deposit and term deposits	37.2		—			—		—			37.2		—
Commercial paper	29.0		—			—		—			29.0		—
U.S. government and agency securities	17.0		—			11.4		(0.1		)	28.4		(0.1		)
Total available-for-sale securities	$	400.7	$	(0.9	)	$	69.6	$	(0.4	)	$	470.3	$	(1.3	)

Investments Classified by Contractual Maturity Date

The contractual maturities of our investments were as follows (in millions):



	March 31, 2018		December 31, 2017
Due within one year	$	468.3	$	440.3
Due within one to three years	82.5		98.0
Total	$	550.8	$	538.3

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following tables present the fair value of our financial assets measured at fair value on a recurring basis as of March 31, 2018 and December 31, 2017 (in millions):



	March 31, 2018								December 31, 2017
	Aggregate Fair Value		Quoted Prices in Active Markets For Identical Assets		Significant Other Observable Remaining Inputs		Significant Other Unobservable Remaining Inputs		Aggregate Fair Value		Quoted Prices in Active Markets For Identical Assets		Significant Other Observable Remaining Inputs		Significant Other Unobservable Remaining Inputs
			(Level 1)		(Level 2)		(Level 3)				(Level 1)		(Level 2)		(Level 3)
Assets:
Corporate debt securities	$	371.5	$	—	$	371.5	$	—	$	411.1	$	—	$	411.1	$	—
Money market funds	108.0		108.0		—		—		195.6		195.6		—		—
Certificates of deposit and term deposits	143.8		—		143.8		—		132.1		—		132.1		—
Commercial paper	93.0		—		93.0		—		128.9		—		128.9		—
U.S. government and agency securities	23.4		20.0		3.4		—		28.4		24.9		3.5		—
Total	$	739.7	$	128.0	$	611.7	$	—	$	896.1	$	220.5	$	675.6	$	—

Reported as:
Cash equivalents	$	188.9							$	357.8
Short-term investments	468.3								440.3
Long-term investments	82.5								98.0
Total	$	739.7							$	896.1

Consolidated Statements of Cash Flows - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 41.6	$ 10.7
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation	36.5	33.3
Amortization of deferred contract costs	20.8	0.0
Depreciation and amortization	13.2	13.5
Other non-cash items—net	0.3	1.5
Amortization of investment premiums	0.1	1.0
Changes in operating assets and liabilities:
Accounts receivable—net	48.9	42.4
Inventory	(7.3)	(3.5)
Prepaid expenses and other current assets	1.2	(8.3)
Deferred contract costs	(32.5)	0.0
Deferred tax assets	(9.6)	(16.6)
Other assets	(0.9)	0.7
Accounts payable	(13.6)	(8.3)
Accrued liabilities	(4.7)	2.9
Accrued payroll and compensation	(10.0)	(5.3)
Other liabilities	(0.6)	(1.1)
Deferred revenue	64.1	61.8
Income taxes payable	(7.8)	5.0
Net cash provided by operating activities	139.7	129.7
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments	(134.9)	(133.0)
Sales of investments	16.3	6.0
Maturities of investments	104.7	109.2
Purchases of property and equipment	(11.6)	(13.5)
Net cash used in investing activities	(25.5)	(31.3)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase and retirement of common stock	(115.5)	0.0
Proceeds from issuance of common stock	45.1	29.5
Taxes paid related to net share settlement of equity awards	(19.2)	(13.7)
Net cash provided by (used in) financing activities	(89.6)	15.8
NET INCREASE IN CASH AND CASH EQUIVALENTS	24.6	114.2
CASH AND CASH EQUIVALENTS—Beginning of period	811.0	709.0
CASH AND CASH EQUIVALENTS—End of period	835.6	823.2
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Transfers of evaluation units from inventory to property and equipment	4.9	5.7
Liability for purchase of property and equipment and asset retirement obligations	$ 3.6	$ 18.7

Consolidated Balance Sheets Parenthetical - $ / shares	Mar. 31, 2018	Dec. 31, 2017
Common Stock, par value (dollars per share)	$ 0.001	$ 0.001
Common Stock, shares authorized	300,000,000	300,000,000
Common Stock, shares issued	168,000,000	167,900,000
Common Stock, shares outstanding	168,000,000	167,900,000

Segment Information

3 Months Ended

Mar. 31, 2018

Segment Reporting [Abstract]

SEGMENT INFORMATION

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our chief executive officer. Our chief executive officer reviews financial information presented on a consolidated basis, accompanied by information about revenue by geographic region for purposes of allocating resources and evaluating financial performance. We have one business activity, and there are no segment managers who are held accountable for operations, operating results and plans for levels or components below the consolidated unit level. Accordingly, we have determined that we have one operating segment, and therefore, one reportable segment.

Revenue by geographic region is based on the billing address of the customer. The following tables set forth revenue and property and equipment—net by geographic region (in millions):



	Three Months Ended
Revenue	March 31, 2018		March 31, 2017
Americas:
United States	$	133.9	$	116.0
Latin America (“LATAM”)	26.5		18.2
Canada	15.4		12.2
Total Americas	175.8		146.4
Europe, Middle East and Africa (“EMEA”)	144.5		126.1
Asia Pacific (“APAC”)	78.7		68.1
Total revenue	$	399.0	$	340.6



Property and Equipment—net	March 31, 2018		December 31, 2017
Americas:
United States	$	115.3	$	115.6
Canada	103.2		103.8
LATAM	0.4		0.3
Total Americas	218.9		219.7
EMEA:
France	13.1		11.9
Other EMEA	3.9		5.8
Total EMEA	17.0		17.7
APAC	9.2		8.0
Total property and equipment—net	$	245.1	$	245.4

The following customers, each of which is a distributor, accounted for 10% or more of our revenue:



	Three Months Ended
	March 31, 2018 ⁽¹⁾		March 31, 2017
Exclusive Networks Group	29	%	20	%
Fine Tec Computers	*		12	%
* Represents less than 10%
⁽¹⁾ Due to the acquisition by Exclusive Networks Group of the U.S. division of Fine Tec Computers (“Fine Tec U.S.”) in July 2017, Fine Tec U.S.’s revenue and accounts receivable have been combined with Exclusive Networks Group.

The following customer, which is a distributor, accounted for 10% or more of net accounts receivable:



	March 31, 2018		December 31, 2017
Exclusive Networks Group	34	%	35	%

Commitments and Contingencies

3 Months Ended

Mar. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

The following table summarizes our future principal contractual obligations as of March 31, 2018 (in millions):



	Total		2018 (remainder)		2019		2020		2021		2022		Thereafter
Operating lease commitments	$	55.4	$	12.6	$	13.9	$	10.7	$	6.8	$	4.2	$	7.2
Inventory purchase commitments	106.1		101.9		—		4.2		—		—		—
Total	$	161.5	$	114.5	$	13.9	$	14.9	$	6.8	$	4.2	$	7.2

Operating Leases—We lease certain facilities under various non-cancelable operating leases, which expire through 2026. Certain leases require us to pay variable costs such as taxes, maintenance, and insurance. The terms of certain operating leases also provide for renewal options and escalation clauses. Rent expense was $4.1 million and $4.5 million during the three months ended March 31, 2018 and March 31, 2017, respectively. Rent expense is recognized using the straight-line method over the term of the lease.

Inventory Purchase Commitments—Our independent contract manufacturers procure components and build our products based on our forecasts. These forecasts are based on estimates of future demand for our products, which are in turn based on historical trends and an analysis from our sales and marketing organizations, adjusted for overall market conditions. In order to reduce manufacturing lead times and plan for adequate component supply, we may issue purchase orders to some of our independent contract manufacturers which may not be cancelable. As of March 31, 2018, we had $106.1 million of open purchase orders with our independent contract manufacturers that may not be cancelable.

Other Contractual Commitments and Open Purchase Orders—In addition to commitments with contract manufacturers, we have open purchase orders and contractual obligations in the ordinary course of business for which we have not received goods or services. As of March 31, 2018, we had $10.0 million in other contractual commitments having a remaining term in excess of one year that may not be cancelable.

Litigation—We are involved in disputes, litigation, and other legal actions. For lawsuits where we are the defendant, we are in the process of defending these litigation matters, and while there can be no assurances and the outcome of these matters is currently not determinable, we currently believe that there are no existing claims or proceedings that are likely to have a material adverse effect on our financial position. There are many uncertainties associated with any litigation and these actions or other third-party claims against us may cause us to incur costly litigation fees, including contingent legal fees with related parties, costs and substantial settlement charges, and possibly subject us to damages and other penalties. In addition, the resolution of any intellectual property litigation may require us to make royalty payments, which could adversely affect our gross margins in future periods. If any of those events were to occur, our business, financial condition, results of operations, and cash flows could be adversely affected. The actual liability in any such matters may be materially different from our estimates, if any, which could result in the need to adjust the liability and record additional expenses. As required under ASC 450, Contingencies, issued by the FASB, we accrue for contingencies when we believe that a loss is probable and that we can reasonably estimate the amount of any such loss.

In October 2016, we received a letter from the United States Attorney’s Office for the Northern District of California requesting information relating to our compliance with the Trade Agreements Act. We have been fully cooperating with this ongoing inquiry and have periodically met and spoken with the United States Attorney’s Office in connection with this matter.

Indemnification—Under the indemnification provisions of our standard sales contracts, we agree to defend our customers against third-party claims asserting various allegations such as product defects and infringement of certain intellectual property rights, which may include patents, copyrights, trademarks or trade secrets, and to pay judgments entered on such claims. In some contracts, our exposure under these indemnification provisions is limited by the terms of the contracts to certain defined limits, such as the total amount paid by our customer under the agreement. However, certain agreements include covenants, penalties and indemnification provisions including and beyond indemnification for third-party claims of intellectual property infringement, that could potentially expose us to losses in excess of the amount received under the agreement, and in some instances to potential liability that is not contractually limited. To date, there have been no material awards under such indemnification provisions.

Consolidated Balance Sheets - USD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017
CURRENT ASSETS:
Cash and cash equivalents	$ 835.6	$ 811.0
Short-term investments	468.3	440.3
Accounts receivable—Net	313.1	348.2
Inventory	80.0	77.3
Prepaid expenses and other current assets	38.8	40.0
Total current assets	1,735.8	1,716.8
LONG-TERM INVESTMENTS	82.5	98.0
PROPERTY AND EQUIPMENT—NET	245.1	245.4
Deferred contract costs	148.7	0.0
DEFERRED TAX ASSETS	138.7	146.9
OTHER INTANGIBLE ASSETS—NET	14.5	16.3
GOODWILL	14.6	14.6
OTHER ASSETS	20.8	19.9
TOTAL ASSETS	2,400.7	2,257.9
CURRENT LIABILITIES:
Accounts payable	55.7	70.0
Accrued liabilities	55.6	50.0
Accrued payroll and compensation	82.3	92.0
Income taxes payable	19.0	21.4
Deferred revenue	817.1	793.8
Total current liabilities	1,029.7	1,027.2
DEFERRED REVENUE	579.3	542.5
INCOME TAX LIABILITIES	84.8	90.2
OTHER LIABILITIES	13.4	8.6
Total liabilities	1,707.2	1,668.5
COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDERS’ EQUITY:
Common stock, $0.001 par value—300 shares authorized; 168.0 and 167.9 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively	0.2	0.2
Additional paid-in capital	957.9	909.6
Accumulated other comprehensive loss	(2.0)	(0.8)
Accumulated deficit	(262.6)	(319.6)
Total stockholders’ equity	693.5	589.4
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 2,400.7	$ 2,257.9

Commitments and Contingencies Minimum Operating Lease Payments (Details) $ in Millions	Mar. 31, 2018 USD ($)
Operating Lease Commitments:
Operating lease commitments, 2018	$ 12.6
Operating lease commitments, 2019	13.9
Operating lease commitments, 2020	10.7
Operating lease commitments, 2021	6.8
Operating lease commitments, 2022	4.2
Operating lease commitments, Thereafter	7.2
Operating lease commitments	55.4
Inventory purchase commitments:
Inventory purchase commitments, 2018	101.9
Inventory purchase commitments, 2019	0.0
Inventory purchase commitments, 2020	4.2
Inventory purchase commitments, 2021	0.0
Inventory purchase commitments, 2022	0.0
Inventory purchase commitments, Thereafter	0.0
Inventory purchase commitments	106.1
Other contractual commitments and open purchase orders:
Contractual Obligation, 2018	114.5
Contractual Obligation, 2019	13.9
Contractual Obligation, 2020	14.9
Contractual Obligation, 2021	6.8
Contractual Obligation, 2022	4.2
Contractual Obligation, Thereafter	7.2
Contractual Obligation	$ 161.5

Stockholders' Equity , Allocation of Stock-Based Compensation Expense (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	$ 36.5	$ 33.3
Income tax benefit from employee stock option plans	6.0	6.6
Cost of product revenue [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	0.4	0.3
Cost of service revenue [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	2.5	2.3
Research and development [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	8.4	7.9
Sales and marketing [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	20.9	19.0
General and administrative [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	4.3	3.8
Restricted Stock Units (RSUs) [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	32.0	29.0
Stock Options [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	2.0	1.8
ESPP [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Total stock-based compensation expense	$ 2.5	$ 2.5

Goodwill and Other Intangible Assets - Net - Other Intangible Assets, Net (Details) - USD ($) $ in Millions	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Finite-Lived Intangible Assets, Net [Abstract]
Gross	$ 40.1		$ 38.5
Accumulated Amortization	25.6		23.8
Total	14.5		14.7
Intangible Assets, Net (Excluding Goodwill) [Abstract]
Gross			40.1
Net	14.5		$ 16.3
Amortization expense	$ 1.8	$ 2.3
Developed Technologies and Other [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted average useful life	3 years 9 months 15 days		3 years 9 months 15 days
Finite-Lived Intangible Assets, Net [Abstract]
Gross	$ 25.6		$ 24.0
Accumulated Amortization	15.0		13.7
Total	$ 10.6		$ 10.3
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Weighted average useful life	4 years 8 months 5 days		4 years 8 months 5 days
Finite-Lived Intangible Assets, Net [Abstract]
Gross	$ 14.5		$ 14.5
Accumulated Amortization	10.6		10.1
Total	$ 3.9		4.4
In Process Research and Development [Member]
Indefinite-Lived Intangible Assets (Excluding Goodwill) [Abstract]
In-process research and development			$ 1.6

Investments in Privately-Held Companies	3 Months Ended
Investments in Privately-Held Companies	Mar. 31, 2018
Investments, All Other Investments [Abstract]
INVESTMENTS IN PRIVATELY-HELD COMPANIES	INVESTMENTS IN PRIVATELY HELD COMPANIES Our investments in the equity securities of privately held companies totaled $12.1 million as of March 31, 2018 and December 31, 2017. These investments, which were previously accounted for at cost, are now accounted for at cost, adjusted for changes in observable prices minus impairment. We own less than 20% of the voting securities in each of these investments and do not have the ability to exercise significant influence over operating and financial policies of the respective entities. These investments are carried at historical cost and are recorded as other assets on our condensed consolidated balance sheets and would be measured at fair value if indicators of impairment existed. As of March 31, 2018, no events have occurred that would adversely affect the carrying value of these investments. As of March 31, 2018, we determined that we had a variable interest in these privately held companies. However, we determined that we were not the primary beneficiary as we did not have the power to direct their activities that most significantly affect their economic performance. The VIEs are not required to be consolidated in our condensed consolidated financial statements.

Financial Instruments and Fair Value

3 Months Ended

Mar. 31, 2018

Financial Instruments and Fair Value [Abstract]

FINANCIAL INSTRUMENTS AND FAIR VALUE

The following tables summarize our investments (in millions):



	March 31, 2018
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Corporate debt securities	$	372.6	$	—	$	(2.3	)	$	370.3
Certificates of deposit and term deposits ⁽¹⁾	86.2		—		(0.1		)	86.1
Commercial paper	71.0		—		—			71.0
U.S. government and agency securities	23.5		—		(0.1		)	23.4
Total available-for-sale securities	$	553.3	$	—	$	(2.5	)	$	550.8

	December 31, 2017
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Corporate debt securities	$	391.0	$	—	$	(1.2	)	$	389.8
Commercial paper	74.2		—		—			74.2
Certificates of deposit and term deposits ⁽¹⁾	45.9		—		—			45.9
U.S. government and agency securities	28.5		—		(0.1		)	28.4
Total available-for-sale securities	$	539.6	$	—	$	(1.3	)	$	538.3
(1) The majority of our certificates of deposit and term deposits are foreign deposits.

The following tables show the gross unrealized losses and the related fair values of our investments that have been in a continuous unrealized loss position (in millions):



	March 31, 2018
	Less Than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Corporate debt securities	$	317.7	$	(1.8	)	$	51.9	$	(0.5	)	$	369.6	$	(2.3	)
Certificates of deposit and term deposits	56.3		(0.1		)	—		—			56.3		(0.1		)
U.S. government and agency securities	15.0		—			8.4		(0.1		)	23.4		(0.1		)
Total available-for-sale securities	$	389.0	$	(1.9	)	$	60.3	$	(0.6	)	$	449.3	$	(2.5	)



	December 31, 2017
	Less Than 12 Months					12 Months or Greater					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Corporate debt securities	$	317.4	$	(0.9	)	$	58.2	$	(0.3	)	$	375.6	$	(1.2	)
Certificates of deposit and term deposits	37.2		—			—		—			37.2		—
Commercial paper	29.0		—			—		—			29.0		—
U.S. government and agency securities	17.0		—			11.4		(0.1		)	28.4		(0.1		)
Total available-for-sale securities	$	400.7	$	(0.9	)	$	69.6	$	(0.4	)	$	470.3	$	(1.3	)

The contractual maturities of our investments were as follows (in millions):



	March 31, 2018		December 31, 2017
Due within one year	$	468.3	$	440.3
Due within one to three years	82.5		98.0
Total	$	550.8	$	538.3

Available-for-sale securities are reported at fair value, with unrealized gains and losses and the related tax impact included as a separate component of stockholders’ equity and in comprehensive income. Realized losses on available-for-sale securities were insignificant in the periods presented and are included in other income (expense)—net in our condensed consolidated statements of operations. We use the specific identification method to determine the cost basis of investments sold.

The unrealized losses on our available-for-sale securities were caused by fluctuations in market value and interest rates as a result of the economic environment. As the decline in market value are attributable to changes in market conditions and not credit quality, and because we have concluded currently that we neither intend to sell nor is it more likely than not that we will be required to sell these investments prior to a recovery of par value, we do not consider these investments to be other-than temporarily impaired as of March 31, 2018.

Fair Value Accounting—We apply the following fair value hierarchy for disclosure of the inputs used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows:

Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2—Inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments.

Level 3—Unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. The inputs require significant management judgment or estimation.

We measure the fair value of money market funds and certain U.S. government and agency securities using quoted prices in active markets for identical assets. The fair value of all other financial instruments was based on quoted prices for similar assets in active markets, or model driven valuations using significant inputs derived from or corroborated by observable market data.

We classify investments within Level 1 if quoted prices are available in active markets for identical securities.

We classify items within Level 2 if the investments are valued using model driven valuations using observable inputs such as quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency. Investments are held by custodians who obtain investment prices from a third-party pricing provider that incorporates standard inputs in various asset price models.

Fair Value of Financial Instruments

Assets Measured at Fair Value on a Recurring Basis

The following tables present the fair value of our financial assets measured at fair value on a recurring basis as of March 31, 2018 and December 31, 2017 (in millions):



	March 31, 2018								December 31, 2017
	Aggregate Fair Value		Quoted Prices in Active Markets For Identical Assets		Significant Other Observable Remaining Inputs		Significant Other Unobservable Remaining Inputs		Aggregate Fair Value		Quoted Prices in Active Markets For Identical Assets		Significant Other Observable Remaining Inputs		Significant Other Unobservable Remaining Inputs
			(Level 1)		(Level 2)		(Level 3)				(Level 1)		(Level 2)		(Level 3)
Assets:
Corporate debt securities	$	371.5	$	—	$	371.5	$	—	$	411.1	$	—	$	411.1	$	—
Money market funds	108.0		108.0		—		—		195.6		195.6		—		—
Certificates of deposit and term deposits	143.8		—		143.8		—		132.1		—		132.1		—
Commercial paper	93.0		—		93.0		—		128.9		—		128.9		—
U.S. government and agency securities	23.4		20.0		3.4		—		28.4		24.9		3.5		—
Total	$	739.7	$	128.0	$	611.7	$	—	$	896.1	$	220.5	$	675.6	$	—

Reported as:
Cash equivalents	$	188.9							$	357.8
Short-term investments	468.3								440.3
Long-term investments	82.5								98.0
Total	$	739.7							$	896.1

There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the three months ended March 31, 2018 and year ended December 31, 2017.

Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Basis of Presentation and Preparation

Basis of Presentation and Preparation—The unaudited condensed consolidated financial statements of Fortinet, Inc. and its wholly owned subsidiaries (collectively, “we,” “us” or “our”) have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information, as well as the instructions to Form 10-Q pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements, and should be read in conjunction with our audited consolidated financial statements as of and for the year ended December 31, 2017, contained in our Annual Report on Form 10-K filed with the SEC on February 26, 2018. In the opinion of management, all adjustments, which includes normal recurring adjustments, considered necessary for a fair presentation have been included. All intercompany balances, transactions and cash flows have been eliminated. The results of operations for the three months ended March 31, 2018 are not necessarily indicative of the results for the full year or for any future periods. The condensed consolidated balance sheet as of December 31, 2017 is derived from the audited consolidated financial statements for the year ended December 31, 2017.

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.

There have been no material changes to our significant accounting policies as of and for the three months ended March 31, 2018, except for the accounting policies for revenue recognition, trade receivables and deferred contract costs that were updated as a result of adopting Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). For more information, refer to the “Recently Adopted Accounting Standards” and Note 2.

Recently Adopted Accounting Standards and Recent Accounting Standards Not Yet Effective

Recently Adopted Accounting Standards

Financial Instruments – Recognition and Measurement

In January 2016, the FASB issued ASU 2016-01—Financial Instruments—Overall: Recognition and Measurement of Financial Assets and Financial Liabilities, which requires most equity investments to be measured at fair value, with subsequent changes in fair value recognized in net income. A practicality exception applies to those equity investments that do not have a readily determinable fair value. These investments may be measured at cost, adjusted for changes in observable prices minus impairment. ASU 2016-01 was effective prospectively for us beginning on January 1, 2018 for our equity investments, which were previously accounted for under the cost-method. We adopted ASU 2016-01 on January 1, 2018. There was no material impact on our condensed consolidated financial statements as of the adoption date.

Revenue Recognition

In May 2014, the FASB issued ASU 2014-09—Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We adopted ASU 2014-09 and its related amendments (collectively known as Topic 606) as of January 1, 2018 using the modified retrospective transition method. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

We recorded a net reduction to our accumulated deficit as of January 1, 2018 of $117.3 million due to the cumulative impact of adopting Topic 606. The primary impact of adopting Topic 606 relates to the deferral of our incremental contract costs, which are comprised of sales commissions. Prior to January 1, 2018, we expensed all sales commissions upfront. Beginning on January 1, 2018, we continue to expense sales commissions related to product sales upfront, but will capitalize and then amortize certain sales commissions on service contracts over the applicable amortization period. The capitalized sales commissions for initial service contracts are deferred and then amortized as expense on a straight-line basis over the period of benefit which we have determined to be five years. Sales commissions for renewal contracts are deferred and then amortized on a straight line basis over the contractual period of the underlying contracts. The deferral of sales commissions generated deferred tax liability of $23.8 million, of which $18.0 million was recorded against deferred tax assets and the remaining $5.8 million was recorded in other long-term liabilities on our consolidated balance sheet. The impact on deferred revenue as of January 1, 2018 was $4.1 million, which primarily relates to certain changes in revenue recognition on software license sales and the acceleration of revenue from U.S.-based channel partners which were previously deferred until the product was sold through. Beginning on January 1, 2018, our sales returns reserve is now included on the balance sheet in accrued liabilities and no longer as a reduction to our accounts receivable. See Note 2 for further details.

The cumulative effects of the changes made to our January 1, 2018 consolidated balance sheet for the adoption of Topic 606 were as follows (in millions):



	Balance at December 31, 2017			Adjustments due to Topic 606			Balance at January 1, 2018
Assets:
Accounts receivable, net	$	348.2		$	13.6		$	361.8
Inventory	$	77.3		$	(0.1	)	$	77.2
Deferred tax assets	$	146.9		$	(18.0	)	$	128.9
Deferred contract costs	$	—		$	137.1		$	137.1

Liabilities:
Accrued liabilities	$	50.0		$	13.6		$	63.6
Deferred revenue, current	$	793.8		$	0.3		$	794.1
Deferred revenue, non-current	$	542.5		$	(4.4	)	$	538.1
Other liabilities, non-current	$	8.6		$	5.8		$	14.4

Stockholders’ equity:
Accumulated deficit	$	(319.6	)	$	117.3		$	(202.3	)

Recent Accounting Standards Not Yet Effective

Leases

In February 2016, the FASB issued ASU 2016-02—Leases, which requires the recognition of right-of-use assets and lease liabilities on the consolidated balance sheet for substantially all leases. ASU 2016-02 includes a number of optional practical expedients that entities may elect to apply. ASU 2016-02 will also require significant additional disclosures about the amount, timing and uncertainty of cash flows from leases. ASU 2016-02 will be effective for us beginning on January 1, 2019, using a modified retrospective approach. Based on our current lease portfolio, we currently estimate the value of leased assets and liabilities that may be recognized on the consolidated balance sheet to be at least $45.0 million. We are continuing to evaluate the impact of ASU 2016-02 and our estimate is subject to change. We do not believe that ASU 2016-02 will have a material impact on our consolidated statements of operations and cash flows. We expect to expand our disclosures in the notes to consolidated financial statements to include more details on our leases, significant judgments and lease-related amounts recognized in the consolidated financial statements.

Revenue Recognition

Revenue recognition

Under Topic 606, we determine revenue recognition through the following steps:

•identification of the contract, or contracts, with the customer,

•identification of the performance obligations in the contract,

•determination of the transaction price,

•allocation of the transaction price to the performance obligations in the contract, and

•recognition of revenue when, or as, we satisfy a performance obligation.

During the three months ended March 31, 2018, we recognized $239.1 million in revenue that was included in the deferred revenue balance as of December 31, 2017.

Investments in Privately-Held Companies (Details) - USD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017
Investments, All Other Investments [Abstract]
Investments in equity securities of privately-held companies	$ 12.1	$ 12.1

Goodwill and Other Intangible Assets - Net - Estimated Future Amortization Expense (Details) - USD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017
Fiscal Years:
2018	$ 5.4
2019	5.8
2020	2.8
2021 and thereafter	0.5
Total	$ 14.5	$ 14.7

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Recently Adopted Accounting Standards

Financial Instruments – Recognition and Measurement

Revenue Recognition

The cumulative effects of the changes made to our January 1, 2018 consolidated balance sheet for the adoption of Topic 606 were as follows (in millions):



	Balance at December 31, 2017			Adjustments due to Topic 606			Balance at January 1, 2018
Assets:
Accounts receivable, net	$	348.2		$	13.6		$	361.8
Inventory	$	77.3		$	(0.1	)	$	77.2
Deferred tax assets	$	146.9		$	(18.0	)	$	128.9
Deferred contract costs	$	—		$	137.1		$	137.1

Liabilities:
Accrued liabilities	$	50.0		$	13.6		$	63.6
Deferred revenue, current	$	793.8		$	0.3		$	794.1
Deferred revenue, non-current	$	542.5		$	(4.4	)	$	538.1
Other liabilities, non-current	$	8.6		$	5.8		$	14.4

Stockholders’ equity:
Accumulated deficit	$	(319.6	)	$	117.3		$	(202.3	)

Recent Accounting Standards Not Yet Effective

Leases

Segment Information (Tables)

3 Months Ended

Mar. 31, 2018

Segment Reporting [Abstract]

Revenue from external customers by geographic region



	Three Months Ended
Revenue	March 31, 2018		March 31, 2017
Americas:
United States	$	133.9	$	116.0
Latin America (“LATAM”)	26.5		18.2
Canada	15.4		12.2
Total Americas	175.8		146.4
Europe, Middle East and Africa (“EMEA”)	144.5		126.1
Asia Pacific (“APAC”)	78.7		68.1
Total revenue	$	399.0	$	340.6

Property and equipment by geographic region



Property and Equipment—net	March 31, 2018		December 31, 2017
Americas:
United States	$	115.3	$	115.6
Canada	103.2		103.8
LATAM	0.4		0.3
Total Americas	218.9		219.7
EMEA:
France	13.1		11.9
Other EMEA	3.9		5.8
Total EMEA	17.0		17.7
APAC	9.2		8.0
Total property and equipment—net	$	245.1	$	245.4

Schedule of customer concentration

The following customers, each of which is a distributor, accounted for 10% or more of our revenue:



	Three Months Ended
	March 31, 2018 ⁽¹⁾		March 31, 2017
Exclusive Networks Group	29	%	20	%
Fine Tec Computers	*		12	%
* Represents less than 10%
⁽¹⁾ Due to the acquisition by Exclusive Networks Group of the U.S. division of Fine Tec Computers (“Fine Tec U.S.”) in July 2017, Fine Tec U.S.’s revenue and accounts receivable have been combined with Exclusive Networks Group.

The following customer, which is a distributor, accounted for 10% or more of net accounts receivable:



	March 31, 2018		December 31, 2017
Exclusive Networks Group	34	%	35	%

Accumulated Other Comprehensive Loss (Changes in Accumulated Balances of Other Comprehensive Loss) (Details) $ in Millions	3 Months Ended
	Mar. 31, 2018 USD ($)
Accumulated Other Comprehensive (Loss) Income [Roll Forward]
Beginning balance	$ (0.8)
Other comprehensive loss before reclassifications	(1.2)
Amounts reclassified from accumulated other comprehensive loss	0.0
Net current-period other comprehensive loss	(1.2)
Ending balance	(2.0)
Tax Benefit Related To Items of Other Comprehensive Income or Loss [Roll Forward]
Beginning balance, tax	0.5
Other comprehensive income before reclassifications, tax	0.0
Amounts reclassified from accumulated other comprehensive income, tax	0.0
Net current-period other comprehensive income, tax	0.0
Ending balance, tax	0.5
Unrealized Gains and Losses on Investments [Member]
Accumulated Other Comprehensive (Loss) Income [Roll Forward]
Beginning balance	(1.3)
Other comprehensive loss before reclassifications	(1.2)
Amounts reclassified from accumulated other comprehensive loss	0.0
Net current-period other comprehensive loss	(1.2)
Ending balance	$ (2.5)

Income Taxes , Narrative (Details) - USD ($)	3 Months Ended
Income Taxes , Narrative (Details) - USD ($)	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Income Tax Disclosure [Abstract]
Effective tax rate (percent)	13.00%	32.00%
U.S. federal and state taxes, withholding taxes and foreign taxes	$ 8,500,000	$ 2,900,000
Excess tax benefits on stock compensation	5,600,000	$ 5,500,000
Unrecognized tax benefits and related interest release	7,800,000
Unrecognized tax benefits	77,600,000		$ 72,500,000
Unrecognized tax benefits that would favoraby affect effective tax rate	76,200,000
Accrued interest and penalties related to uncertain tax benefits	13,400,000		$ 13,500,000
Possible decrease in unrecognized tax benefits	7,000,000
Approved refund claim	$ 6,800,000

Accumulated Other Comprehensive Loss

3 Months Ended

Mar. 31, 2018

Other Comprehensive Income (Loss), Net of Tax [Abstract]

ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table summarizes the changes in accumulated balances of other comprehensive loss (in millions):



	March 31, 2018
	Unrealized Losses on Investments			Tax provision related to unrealized gains or losses on investments		Total
Beginning balance	$	(1.3	)	$	0.5	$	(0.8	)

Other comprehensive loss before reclassifications	(1.2		)	—		(1.2		)
Amounts reclassified from accumulated other comprehensive loss	—			—		—
Net current-period other comprehensive loss	(1.2		)	—		(1.2		)
Ending balance	$	(2.5	)	$	0.5	$	(2.0	)

Amounts reclassified from accumulated other comprehensive loss for unrealized losses on investments and tax provision related to unrealized gains or losses on investments are recorded in other income (expense)—net and in benefit from income taxes, respectively.

Stockholders' Equity , Share Repurchase Program (Details) - 2016 Share Repurchase Program [Member] - USD ($) $ / shares in Units, shares in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Jan. 31, 2016
Share Repurchase Program [Line Items]
Stock repurchase program, authorized amount		$ 1,000,000,000.0		$ 200,000,000
Additional shares authorized		$ 700,000,000.0	$ 100,000,000.0
Stock repurchased in the period, shares	2.5
Stock repurchased, average price (in dollars per share)	$ 45.96
Stock repurchased in the period, value	$ 115,500,000
Stock repurchase program, unused balance	$ 327,300,000

Revenue Recognition - Income Statement (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
REVENUE:
Product	$ 142.8	$ 135.3
Service	256.2	205.3
Total revenue	399.0	340.6
COST OF REVENUE:
Product	58.2	55.3
GROSS PROFIT:
Product	84.6	80.0
Service	217.2	170.0
Total gross profit	301.8	250.0
OPERATING EXPENSES:
Sales and marketing	185.3	170.4
OPERATING INCOME	32.4	5.4
INCOME BEFORE INCOME TAXES	36.7	8.1
BENEFIT FROM INCOME TAXES	(4.9)	(2.6)
NET INCOME	$ 41.6	$ 10.7
Net income per share (Note 8):
Basic (in dollars per share)	$ 0.25	$ 0.06
Diluted (in dollars per share)	$ 0.24	$ 0.06
ASU 2014-09 \| Balances Without Adoption of Topic 606
REVENUE:
Product	$ 137.1
Service	255.5
Total revenue	392.6
COST OF REVENUE:
Product	56.7
GROSS PROFIT:
Product	80.4
Service	216.5
Total gross profit	296.9
OPERATING EXPENSES:
Sales and marketing	197.0
OPERATING INCOME	15.8
INCOME BEFORE INCOME TAXES	20.1
BENEFIT FROM INCOME TAXES	(8.7)
NET INCOME	$ 28.8
Net income per share (Note 8):
Basic (in dollars per share)	$ 0.17
Diluted (in dollars per share)	$ 0.17
ASU 2014-09 \| Effect of Change Increase (Decrease)
REVENUE:
Product	$ 5.7
Service	0.7
Total revenue	6.4
COST OF REVENUE:
Product	1.5
GROSS PROFIT:
Product	4.2
Service	0.7
Total gross profit	4.9
OPERATING EXPENSES:
Sales and marketing	(11.7)
OPERATING INCOME	16.6
INCOME BEFORE INCOME TAXES	16.6
BENEFIT FROM INCOME TAXES	3.8
NET INCOME	$ 12.8
Net income per share (Note 8):
Basic (in dollars per share)	$ 0.08
Diluted (in dollars per share)	$ 0.07

Revenue Recognition - Disaggregated Revenues (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Disaggregation of Revenue [Line Items]
Product	$ 142.8	$ 135.3
Service	256.2	205.3
Total revenue	399.0	340.6
Security Subscription [Member]
Disaggregation of Revenue [Line Items]
Service	136.6	113.5
Technical Support [Member]
Disaggregation of Revenue [Line Items]
Service	109.6	81.1
Professional Services and Training [Member]
Disaggregation of Revenue [Line Items]
Service	$ 10.0	$ 10.7

Stockholders' Equity , Restricted Stock Units Activity (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Shares withheld for taxes	0.4	0.4
Tax withholding upon vesting of restricted stock awards	$ 19.2	$ 13.7
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Balance, beginning (shares)	8.5
Granted (shares)	2.5
Forfeited (shares)	(0.3)
Vested (shares)	(1.4)
Balance, ending (shares)	9.3
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Balance, weighted-average grant-date fair value per share (in dollars per share)—beginning	$ 34.79
Granted, weighted-average grant-date fair value per share (in dollars per share)	49.05
Forfeited, weighted-average grant-date fair value per share (in dollars per share)	35.63
Vested, weighted-average grant-date fair value per share (in dollars per share)	34.15
Balance, weighted-average grant-date fair value per share (in dollars per share)—ending	$ 38.86
Compensation cost not yet recognized	$ 333.3
Compensation cost not yet recognized period of recognition	2 years 10 months 28 days

Revenue Recognition (Details) - USD ($)	3 Months Ended
Revenue Recognition (Details) - USD ($)	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Disaggregation of Revenue [Line Items]
Reserves for sales returns	$ 12,900,000
Accounts receivable	313,100,000		$ 348,200,000
Deferred revenue recognized in period	239,100,000
Remaining performance obligation	1,400,000,000
Allowance for doubtful accounts	700,000		900,000
Customer Refund Liability, Current			$ 13,600,000
Amortization of deferred contract costs	20,800,000	$ 0
Impairment loss	$ 0
Sales Commissions [Member]
Disaggregation of Revenue [Line Items]
Revenue recognition period (in years)	3 years
Minimum [Member] \| Sales Commissions [Member]
Disaggregation of Revenue [Line Items]
Revenue recognition period (in years)	1 year
Maximum [Member] \| Sales Commissions [Member]
Disaggregation of Revenue [Line Items]
Revenue recognition period (in years)	5 years

Goodwill and Other Intangible Assets - Net - Narrative (Details) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Indefinite-lived Intangible Assets [Line Items]
Goodwill	$ 14,600,000		$ 14,600,000
Goodwill impairment	0	$ 0
Amortization expense	$ 1,800,000	$ 2,300,000
In Process Research and Development [Member]
Indefinite-lived Intangible Assets [Line Items]
In-process research and development			$ 1,600,000

Financial Instruments and Fair Value , Fair Value Measurements (Details) - Recurring Basis [Member] - USD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017
Fair Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Assets, Fair Value Disclosure	$ 739.7	$ 896.1
Fair Value [Member] \| Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Assets, Fair Value Disclosure	128.0	220.5
Fair Value [Member] \| Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Assets, Fair Value Disclosure	611.7	675.6
Fair Value [Member] \| Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Assets, Fair Value Disclosure	0.0	0.0
Fair Value [Member] \| Corporate debt securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	371.5	411.1
Fair Value [Member] \| Corporate debt securities [Member] \| Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	0.0	0.0
Fair Value [Member] \| Corporate debt securities [Member] \| Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	371.5	411.1
Fair Value [Member] \| Corporate debt securities [Member] \| Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	0.0	0.0
Fair Value [Member] \| Money market funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	108.0	195.6
Fair Value [Member] \| Money market funds [Member] \| Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	108.0	195.6
Fair Value [Member] \| Money market funds [Member] \| Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	0.0	0.0
Fair Value [Member] \| Money market funds [Member] \| Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	0.0	0.0
Fair Value [Member] \| Certificates of deposit and term deposits [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	143.8	132.1
Fair Value [Member] \| Certificates of deposit and term deposits [Member] \| Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	0.0	0.0
Fair Value [Member] \| Certificates of deposit and term deposits [Member] \| Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	143.8	132.1
Fair Value [Member] \| Certificates of deposit and term deposits [Member] \| Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	0.0	0.0
Fair Value [Member] \| Commercial paper [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	93.0	128.9
Fair Value [Member] \| Commercial paper [Member] \| Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	0.0	0.0
Fair Value [Member] \| Commercial paper [Member] \| Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	93.0	128.9
Fair Value [Member] \| Commercial paper [Member] \| Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	0.0	0.0
Fair Value [Member] \| U.S. government and agency securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	23.4	28.4
Fair Value [Member] \| U.S. government and agency securities [Member] \| Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	20.0	24.9
Fair Value [Member] \| U.S. government and agency securities [Member] \| Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	3.4	3.5
Fair Value [Member] \| U.S. government and agency securities [Member] \| Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	0.0	0.0
Reported as [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Assets, Fair Value Disclosure	739.7	896.1
Reported as [Member] \| Cash equivalents [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	188.9	357.8
Reported as [Member] \| Short-term investments [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	468.3	440.3
Reported as [Member] \| Long-term investments [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, Fair Value Disclosure	$ 82.5	$ 98.0