Cybersecurity Companies Deliver Mixed Earnings

Firewall provider

Fortinet Inc.

posted first-quarter net income of $138.4 million, according to generally accepted accounting principles, or GAAP, an increase from $107.2 million in the year-earlier quarter. Non-GAAP revenue rose to $954.8 million from $710.3 million, driven by strong demand for the company’s FortiGate technology.

Yet continuing supply-chain issues caused the Sunnyvale, Calif., company’s order backlog to increase by $116 million from the previous quarter, bringing the value of backlogged orders to $278 million. Parts to make physical firewalls, which filter the traffic going to a computer, are hard to get, Chief Financial Officer

Keith Jensen

said on a call with analysts.

“We are experiencing exceptionally strong demand, demand that continues to exceed supply by more than historical norms,” he said.

NetScout

Swung to a net loss; revenue down 10%

NetScout Systems Inc.,

which specializes in network security, also said supply-chain issues were affecting its order flow.

Jean Bua,

NetScout’s chief financial officer, said the company had seen an acceleration in software orders as some customers moved from physical to digital security products. The company said its backlog of unshipped orders totaled more than $100 million.

Westford, Mass.-based NetScout reported a $7.3 million net loss under GAAP for its fiscal fourth quarter ended March 31, compared with a year-earlier profit of $11.4 million. Revenue fell to $191.2 million from $213.4 million.

Cybersecurity companies often post strong revenue figures, but not necessarily profits. Many say that GAAP standards often don’t reflect the true nature of their profitability, as GAAP doesn’t take into account some intricacies of how they generate money, such as subscription models for services. Some cybersecurity companies prefer to focus on revenue growth and free cash-flow metrics instead.

Rapid7

Net loss widened; revenue up 34%

Security company

Rapid7 Inc.

reported a net loss of $45 million for the first quarter, compared with a year-earlier loss of $29.9 million, though revenue rose to $157.4 million from $117.5 million.

The Boston-based company suspended new business and renewals with organizations located in Russia and Belarus, an action that Chief Financial Officer Tim Adams said wouldn’t affect results.

Akamai

Net income down 23%; revenue up 7.2%

Internet security company

Akamai Technologies Inc.

said it would feel some impact from the decision to terminate its business with majority-state-owned Russian companies. Around 1% of its revenue stemmed from the country, Chief Executive

Tom Leighton

said.

The Cambridge, Mass., company reported net income of $119.2 million for the first quarter, down from $155.7 million in the year-earlier period. Revenue rose to $903.6 million from $842.7 million.

Mr. Leighton said that geopolitical events and a stronger dollar played into Akamai’s challenges, and the company revised its guidance down.

The number of cyberattacks has increased sharply, with Akamai’s customers experiencing triple the amount of web-application attacks alone, compared with a year earlier, Mr. Leighton said. “And that’s an area where we can really help our customers, so that could have some counterbalance in terms of the security business,” he said.

Write to James Rundle at james.rundle@wsj.com

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