Fortinet had a busy day, announcing a partnership with colocation provider Equinix, launching its smallest SD-WAN appliance yet, and reporting robust fourth quarter 2019 operating results.

The Equinix deal is focused on making it easier for enterprises to move their workloads entirely to the cloud. Under the partnership, Fortinet's Secure SD-WAN will be available as a virtual service running in Equinix's Network Edge platform.

Fortinet claims that the approach will allow customers to leverage the capabilities and security of SD-WAN across applications running in multiple public clouds.

"By offering Fortinet Secure SD-WAN as a virtual network service on Network Edge, customers can potentially reduce capital expenses while seamlessly deploying simplified WAN Edge operations closer to end users, clouds, and valuable ecosystems in more global locations,” said Bill Long, SVP of core product management at Equinix, in a statement.

Big on small

Fortinet is also going after a new market segment with the launch of the diminutive FortiGate 40F SD-WAN gateway. Despite its size, the gateway is aimed at a relatively large and untapped market: small- to mid-sized businesses (SMBs).

And in this case, smaller does not mean less capable. Like its bigger siblings, the new product features the same next-generation firewall, SD-WAN, and routing capabilities and is powered by the company's fourth-generation security processor, which launched last November.

However, not all of those flavors are designed with SMBs in mind. Fortinet sees the gateway as one of its most versatile appliances yet. As such, the standard model is actually being targeted at large distributed organizations with small branch locations and limited IT staff.

FortiGate is also offering a 4G LTE-equipped model for mobile and remote locations, and that cellular functionality can also be used as failover protection. It's also offering a model with an integrated Wi-Fi access point aimed at branch offices looking for an all-in-one appliance.

Fortinet Q4 earnings

Rounding out the day, Fortinet posted a robust 21% year-over-year growth in revenue during the fourth quarter of 2019. Q4 revenues topped $614 million, and full-year revenues came in at $2.16 billion.

Fortinet CEO Ken Xie, in a statement, said the Q4 growth was driven "by our ability to include cutting-edge security and networking functionality, including SD-WAN, in our products."

During the call, Xie praised the company's rapid growth in the SD-WAN market. Late last year, the company announced it had surpassed 21,000 customers, which is 1,000 more than competitor Cisco has reported. He also highlighted a Gartner report from 2019 that ranked Fortinet as the No. 3 SD-WAN vendor.

However, Fortinet could face some headwinds in 2020 as the company attempts to integrate recently acquired security, automation, and response (SOAR) provider CyberSponse and endpoint protection vendor enSilo.

"We estimate the recent acquisitions will be a 100-basis-point year-to-year headwind to our 2020 operating margin," Fortinet CFO Keith Jensen said during the company's earnings call.

In a note from Keith Bachman of BMO Capital Markets, the financial analyst seized on Fortinet's SD-WAN performance, which is an area that he sees driving the adoption of Fortinet products in 2020. He wrote that Fortinet’s fourth-quarter billings and revenues inspired greater confidence in the company’s future, despite lower-than-expected operating margins.

"While operating margins were disappointing, we view the quarter as more positive than negative," he wrote, adding that the drop in operating margins was likely a temporary setback.

Looking to the first quarter of 2020, Fortinet is projecting revenues of between $555 million and $565 million and billings of between $635 million and $655 million.