Investing in Fortinet, Inc.'s common stock involves a high degree of risk.

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Investors should carefully consider the following risks and all other information contained in this Annual Report on Form 10-K.

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Fortinet, Inc.'s operating results have historically varied from period to period.

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Changes in the network security market in particular and other security and networking markets, such as SD-WAN, may affect the company's results.

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- increases or decreases in Fortinet, Inc.'s billings, revenue and expenses caused by fluctuations in foreign currency exchange rates or a strengthening of the U.S. dollar.

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– insolvency, credit or other difficulties confronting Fortet's key suppliers and channel.

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partners,.

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which could affect their able to purchase or pay for products and services and could disrupt.

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FortNet's supply or distribution chain.

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Fortinet, Inc. may experience slowing growth, or a decrease, in billings, revenue, operating margin and free cash flow.

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An extended period of global supply chain disruption, demand reduction and economic slowdown would materially negatively affect Fortinet's overall business.

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The full impact of the COVID-19 pandemic is unknown at this time.

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Fortinet, Inc. rely on third-party channel partners for substantially all of its revenue.

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The termination of any relationship with any significant channel partner may adversely impact the company's sales.

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A small percentage of the company's revenue, accounts receivable and other assets are exposed to the credit and liquidity risk of some of its partners.

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Exclusive Networks Group accounted for 34% and 36% of Fortnet's total net Accounts Receivable as of December 31, 2020 and 2019.

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The loss of one or more of Fortinet's significant channel partners could harm the company's operating results.

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Any new sales channel partner will require extensive training and may take several months to achieve productivity.

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Reliance on a concentration of shipments at the end of the quarter could cause Fortetin's billings and revenue to fall below expected levels.

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Fortinet, Inc. rely significantly on revenue from FortiGuard.

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Revenue from these services may decline or fluctuate.

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The loss of the services of any of Fortinet's key personnel could seriously harm the company's business, financial condition and results of operations.

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Changes in immigration laws, including changes to the rules regarding H1-B visas, may also harm Fortnet's Ability to Attract and Retain Qualified Personnel.

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Violations of laws or key control policies by Fortnetin could lead to litigation, regulatory action, delays in revenue recognition, financial reporting misstatements.

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Fortinet, Inc. may spend substantial time, effort and money in Fortinet's sales efforts without being successful in producing any sales.

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consolidation or continued changes in buying behavior by larger customers within this industry could negatively impact Fortnet's business.

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Fortinet, Inc.'s ability to grow depends in large part on Fortinet's success in recruiting, training and retaining sufficient numbers of sales personnel.

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Selling to U.S. and foreign federal state and local governmental agency end-customers have accounted for a portion of Fortnet's revenue.

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- funding authorizations and requirements unique to government agencies, with funding or purchasing reductions or delays adversely affecting public sector demand for Fortinet's products.

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- geopolitical matters, including tariff and trade disputes, government shutdowns, trade protectionism and other political dynamics.

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Conditions in Fortinet's markets could change rapidly and significantly as a result of technological advancements or continuing market consolidation.

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Current or potential competitors may be able to develop products or services, and leverage new business models.

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Customers may accept these bundled products and services rather than separately purchasing Fortetin Inc.’s products.

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Sales of many of Fortinet, Inc.'s products depend on increased demand for incorporating broad security functionality into one appliance.

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Target customers may view "all-in-one" network security solutions as inferior.

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Large, well-established providers of networking equipment, such as Cisco, F5 Networks and Juniper, offer, and may continue to introduce, security features.

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Managing Fortinet's inventory is complex.

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Channel partners may increase orders during periods of product shortages.

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Fortetinet has increased its on-hand stock of some products to reduce the risk of inventory excesses.

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Fortinet, Inc. outsource the manufacturing of its security appliance products to contract manufacturing partners.

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These partners include manufacturers with facilities located in Taiwan, China and other countries outside the United States.

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Any manufacturing disruption related to these third-party manufacturers or their component suppliers could impair Fortinet's ability to fulfill orders.

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Fortinet's reliance on third-party manufacturers and foundries limits Fortinet, Inc.'s control over environmental regulatory requirements.

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Some key components come from limited sources of supply, making the company susceptible to supply shortages.

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Outside factors such as natural disasters may be adversely impacted.

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- inability to ship products on a timely basis.

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Increased component costs could result in lower gross margins.

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Larger competitors with more diverse product offerings may reduce the price.

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Because Fortinet, Inc.'s products and services are complex, they have contained and may contain defects or errors that are not detected until after their commercial release and deployment.

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Defects or vulnerabilities may impede or block network traffic.

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FortiGuard and other security subscription.

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updates may not be able to detect or prevent viruses, worms or similar threats.

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The network security market is expected to continue to evolve rapidly.

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Costs for contract development can be substantial.

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Fortet's profitability may be harmed if it is unable to recover these costs.

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The success of Fortinet, Inc.'s web filtering service depends on the breadth and accuracy of the company's URL database.

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The total number of URLs and software applications is growing rapidly.

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Any failure to effectively categorize and filter websites could impair the growth ofFortinet's business.

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Fortinet's ability to sell its products is dependent on the quality of its technical support services.

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Product errors could delay the development or release of new products or new versions of products.

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Hackers and malicious parties may be able to develop and deploy viruses, worms, ransomware and other malicious software programs.

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Third parties might also attempt to fraudulently induce Fortetin's employees to transfer funds or disclose information.

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The company cannot guarantee that the measures it has taken to protect its networks, systems and websites will provide adequate security.

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Unauthorized parties have targeted Fortinet, Inc. using sophisticated techniques.

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An actual breach could significantly harm the company and its customers.

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A substantial majority of Fortnet's employees are temporarily working remotely, which may pose additional data security risks.

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Fortinet, Inc. must continue to improve and expand its information technology and financial, operating, security and administrative systems and controls.

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Failure to ensure appropriate systems, processes and control could result in increased costs and harm the company's reputation.

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Fortinet, Inc. rely primarily on patent, trademark, copyright and trade secrets laws.

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Any issued patents may be challenged, invalidated or circumvented.

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Failure to comply with the terms of.

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the underlying open source software licenses could restrict Fortetin.

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Inc’s ability to sell its products.

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Third parties may offer a license to their technology, but the terms of any offered license may not be acceptable.

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Failure to obtain a licence could cause Fortinet's business, financial condition and results of operations to be materially and adversely affected.

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From time to time Fortinet, Inc. are subject to lawsuits claiming patent infringement.

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The cost to defend such lawsuits and any settlement payment or adverse result could have a material adverse effect on the company's results of operations.

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Fortinet, Inc.'s business is subject to regulation by various federal, state, regional, local and foreign governmental agencies.

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Non-compliance with applicable regulations or requirements could subject Fortinet,.

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Inc. to investigations, sanctions, enforcement actions, disgorgement of profits, fines, damages and civil and criminal penalties or injunctions.

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Because Fortinet, Inc. incorporate encryption technology, certain of its products are subject to U.S. export controls.

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If the company were to fail to comply, it could face substantial civil and criminal penalties.

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Any change in export or import regulations may create delays in the introduction of Fortnetin's products in international markets.

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The EU RoHS Directive and the similar laws of other jurisdictions ban or restrict the presence of certain hazardous substances.

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It is possible one or more of these use exemptions for lead and other substances in network infrastructure equipment will be revoked or extended.

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Fortinet may be required to re-engineer its products to use components to comply with these regulations.

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Starting on January 5, 2021, Fortinet, Inc. will be responsible for submitting product data to a database of hazardous substances known as the Substances of Concern In articles, as such and in complex objects (Products) database.

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Failure to comply with these and future environmental rules and regulations could result in reduced sales and increased costs.

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The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported.

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Fortinet, Inc. base its estimates on historical experience and on various other assumptions.

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The company is exposed to fluctuations in currency exchange rates, which could negatively affect its financial condition.

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Fortinet, Inc. may undertake corporate operating restructurings or transfers of assets that involve Fortinet's group of foreign country subsidiaries.

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Such restructuring could increase the company's income tax liabilities, and in turn, increase its global effective tax rate.

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The market price of Fortinet, Inc.'s common stock may be subject to wide fluctuations in response to, among other things, the risk factors described in this periodic report.

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The extent to which the outbreak of the COVID-19 pandemic may impact the stock price may fluctuate significantly.

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In July 2020, Fortinet, Inc.'s board of directors approved a $500.0 million increase in the authorized stock repurchase amount under the Repurchase Program.

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There can be no assurance that the board's decision to rep purchase stock would be the most effective use of Fortnet's cash and cash equivalents.

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Anti-takeover provisions will not have the effect of preventing activist stockholders from seeking to increase short-term stockholder value.

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Political instability and conflict could adversely affect Fortinet's business and financial performance.

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Natural disasters could affect the ability to manufacture and ship products.

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possibly in a material way, and could result in delays and reductions in billings and revenues.

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Regional instability, civil unrest, labor disruptions, acts of terrorism and other geo-political unrest could cause disruptions in Fortinet's business.

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A change in accounting standards or practices could have a significant effect on the company's reported financial results.

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Investing in Fortinet, Inc.'s common stock involves a high degree of risk.

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Investors should carefully consider the following risks and all other information contained in this Annual Report on Form 10-K.

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- the timing of revenue recognition for Fortinet, Inc.'s sales, including any impacts resulting from extension of payment terms to distributors and backlog levels.

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Changes in the growth rates of the network security market in particular and other security and networking markets.

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Fears over the impact of foreign currency exchange rates on the U.S. dollar.

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The COVID-19 pandemic, including its ongoing variants, could adversely affect Fortinet, Inc.'s business.

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An extended period of global supply chain disruption, demand reduction and economic slowdown would materially negatively affect the company's overall business and operating results.

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Fortinet, Inc. may experience slowing growth, or a decrease, in billings, revenue, operating margin and free cash flow.

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Adverse economic conditions or reduced information technology spending may adversely impact Fortnet's business, financial condition and results of operations.

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in demand from products to services, increased competition, a decrease in the growth of Fortinet, Inc.'s overall market or softness in demand in certain geographies or industry verticals.

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Changes inFortinet's strategic opportunities, execution risks and failure for any reason to continue to capitalize on sales and growth opportunities.

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Fortinet, Inc.'s dependence on a limited number of key channel partners means that Fortinet's billings, revenue and operating results may be harmed by the inability of these key partners to successfully sell the company's products and services.

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Exclusive accounted for 31%, 30% and 31% of Fortnet's total revenue during 2021, 2020 and 2019.

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Fortinet, Inc. provide sales channel partners with specific programs to assist them with selling Fortinet's products.

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The loss of one or more of Fortnet's significant channel.

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partners could harm the firm's operating results, it says.

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A delay in the arrival of the logistics partner or other factors such as a power outage could prevent Fortetin from shipping and billing for a material amount of products.

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FortiGuard and other security subscription and Fortispecialty technical support services may decline or fluctuate.

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Fortinet, Inc.'s future success depends in part on its ability to attract and retain highly skilled personnel.

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The loss of the services of any of Fortinet's key personnel, any failure to have in place and execute an effective succession plan for key executives and delays in hiring required personnel could seriously harm the company's business, financial condition and results of operations.

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As of December 31, 2021, Fortinet, Inc. had an aggregate of $988.4 million of indebtedness outstanding under its senior notes.

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Risks related to international sales and operations include disruption in supply chain and decreases in demand by partners or end-customers.

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- costs of complying with, and the risks, reputational damage and other cost of non-compliance with U.S. or other foreign laws and regulations for foreign operations.

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- limitations on Fortinet, Inc.'s ability to sell its products in certain foreign markets, including the risk of not being able to comply with certain laws.

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– changes in tax, tariff, employment and others laws, which could have a material adverse effect on the company's business.

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Large and medium-sized businesses, service providers and MSSPs and government organizations often undertake a significant evaluation process that results in a lengthy sales cycle.

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Fortinet's large business and service provider customers may also become more deliberate in their purchases as they plan their next-generation network security architecture.

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Fortinet, Inc.'s ability to grow depends in large part on Fortinet's success in recruiting, training and retaining sufficient numbers of sales personnel.

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Selling to U.S. and foreign federal state and local governmental agency end-customers have accounted for a portion of Fortnet's revenue.

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Government spending may also be negatively impacted by the COVID-19 pandemic.

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It may be difficult to obtain the requisite permits and clearances required for certain purchases.

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The market for network security products is intensely competitive and dynamic.

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The global chip shortage caused by the COVID-19 pandemic is having.

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an adverse impact on the company's ability to manage its inventory and to meet demand in a timely fashion.

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Fortetinet can't manufacture and ship its products due to, for example, global.

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chip shortages, excessive demand on contract manufacturers capacity, natural disasters and.

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health emergencies.

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The COVID-19 pandemic has continued to impact global supply chains.

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Supply chain disruption, part shortages and shipping challenges are increasing Fortetinet's costs.

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These increased costs have resulted in Fortnet's increasing the prices of its products.

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Sales of many of Fortinet, Inc.'s products depend on increased demand for incorporating broad security functionality into one appliance.

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Target customers may view "all-in-one" network security solutions as inferior to other vendors.

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Any manufacturing disruption related to Fortinet, Inc.'s third-party manufacturers or their component suppliers could impair the company's ability to fulfill orders.

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Any increase in tensions between China and Taiwan, including threats of military actions, could adversely affect Fortetinet's manufacturing operations in Taiwan.

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Fortinet's reliance on third-party manufacturers and foundries limits Fortinet, Inc.'s control over environmental regulatory requirements.

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Certain minerals and metals, known as "conflict minerals," that are contained in Fortnet's products have originated in the Democratic Republic of the Congo or an adjoining country.

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Lead times for components may be adversely impacted by factors outside of Fortinet, Inc.'s control.

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Increased component costs could result in lower gross margins.

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Larger competitors with more diverse product offerings may reduce the price.

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The security and integrity of Fortetinet's products could be exploited by third parties or insiders.

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An actual, possible or perceived security breach, regardless of whether the breach is attributable to the failure of the company to prevent it, could adversely affect the market’s perception offortinet.com and its products.

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The network security market is expected to continue to evolve rapidly.

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Costs for contract development can be substantial.

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Fortet's profitability may be harmed if it is unable to recover these costs.

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The success of Fortinet, Inc.'s web filtering service depends on the breadth and accuracy of the company's URL database.

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The total number of URLs and software applications is growing rapidly.

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Any failure to effectively categorize and filter websites could impair the growth ofFortinet's business.

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Fortinet, Inc.'s ability to sell its products is dependent on quality control processes and the quality of technical support services.

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The occurrence of hardware and software errors could delay or reduce market acceptance of Fortetinet’s products.

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Hackers and malicious parties may be able to develop and deploy viruses, worms, ransomware and other malicious software programs.

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Third parties might also attempt to fraudulently induce employees to transfer funds or disclose information in order to gain access to Fortet's networks.

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An actual or perceived breach could significantly harm Fortnet's customers.

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Any breach of Fortinet, Inc.'s internal networks, systems or websites could have an adverse effect on the company's business, operating results and stock price.

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FortiGuard and other security subscription and support services could also be affected.

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Fortinet, Inc. may experience difficulties maintaining and expanding its internal business management systems.

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The company may not be able to obtain adequate patent protection or effectively enforce its issued patents.

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Policing unauthorized use of Fortinet, Inc.'s technology or products is difficult.

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Law of some foreign countries do not protect Fortnet's proprietary rights to as great an extent as the laws of the United States.

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Use and distribution of Open Source Software may entail greater risks than using third-party commercial software.

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Patent and other IP disputes are common in the network security industry.

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Any claim of infringement by a third party, even those without merit, could cause Fortinet, Inc. to incur substantial costs.

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In December 2021, Fortnet, Ltd. entered into an agreement that provided for settlement and dismissal of an existing patent infringement lawsuit.

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Many of Fortinet, Inc.'s products include software or other IP licensed from third parties.

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There can be no assurance that the necessary licenses would be available on acceptable terms, if at all.

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In order to remain competitive, Fortinet, Inc. may seek to acquire additional businesses, products, technologies or IP.

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The company may not be successful in negotiating the terms of the acquisition or investment or financing it.

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Fortinet, Inc.'s business is subject to regulation by various federal, state, regional, local and foreign governmental agencies.

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Non-compliance with applicable regulations or requirements could subject Fortinet,.

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Inc. to investigations, sanctions, enforcement actions, disgorgement of profits, fines, damages and civil and criminal penalties or injunctions.

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Because Fortinet, Inc. incorporate encryption technology, certain of its products are subject to U.S. export controls.

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If the company were to fail to comply, it could face substantial civil and criminal penalties.

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Any change in export or import regulations may create delays in the introduction of Fortnetin's products in international markets.

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The timing and effect of these laws, regulations and other related policies on the company's business may be uncertain.

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If the U.S. expands increased tariffs or retaliatory trade measures are taken by other countries in response to the tariffs, the cost of the products could increase.

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The EU RoHS Directive and the similar laws of other jurisdictions ban or restrict the presence of certain hazardous substances.

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Fortinet, Inc. have incurred costs to comply with these laws, including research and development costs, costs associated with assuring the supply of compliant components.

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Investors may choose not to invest in Fortinet, Inc. if they believe the company's policies and actions relating to corporateresponsibility are inadequate.

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It is not possible to predict the impact of foreign currency exchange rates on the firm's revenues and expenses.

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Fortinet, Inc.'s provision for income taxes is subject to volatility and could be adversely affected by several factors.

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Tax authorities of the jurisdictions in which Fortetina operate may challenge its methodologies for valuing developed technology.

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There may be material differences between Fortnetina's forecasted and actual tax rates.

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The Sarbanes-Oxley Act of 2002 and Dodd-Frank impose various requirements on public companies.

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If securities or industry analysts stop publishing research or publish inaccurate or unfavorable research about Fort Ethernet, the company's stock price and trading volume could decline.

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securities litigation against Fortinet, Inc. could result in substantial costs and divert Fortet's management’s attention from other business concerns, which could seriously harm the company's business.

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Share repurchases under the Repurchase Program could increase the volatility of the trading price of Fortnet's common stock.

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As a Delaware corporation, Fortinet, Inc. are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation Law.

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Political instability and weakening product demand caused by political instability, changes in trade agreements and conflicts, such as the conflict between Russia and Ukraine, could adversely affect the company's business and financial performance.

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corporate headquarters are located in the San Francisco Bay Area, a region known for seismic activity.

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Natural disasters could affect Fortinet, Inc.'s manufacturing vendors, suppliers or logistics providers’ ability to perform services.

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