Keith Jensen
Chief Financial Officer at Fortinet
Thank you, Ken, and good afternoon, everyone. Let's start with a more detailed quarterly discussion. Second quarter results were solid and broad-based across geographies, customer sizes, industries and use cases, driving market share gains and demonstrating the strong growth from our three key growth drivers. First, an elevated threat environment; second, the convergence of security and networking; and third, the consolidation of security products across our platform offerings.
Total revenue of $1.03 billion was up 29%, passing the $1 billion milestone in quarterly revenue for the first time in our history. Total product revenue growth was up 34%. Core platform and platform extension product revenue growth was up 35% and 33%, respectively. We continue to see robust product revenue growth from a wide range of security use cases, including Secure SD-WAN and operational technology, or OT. Total service revenue growth increased sequentially to 25%, resulting in service revenue of $629 million.
Support and related service revenue was up 26% to $289 million, while security subscription service revenue was up 25% or two points sequentially to $340 million. Service billings defined as total billings minus product revenue were up 36%. The year-over-year growth rate for short-term deferred revenue has increased for six quarters in a row from under 21% in Q4 of 2020 to just over 31% in Q2 of 2022, the highest short-term deferred revenue growth rate in over six years.
The accelerating growth rate for service billings and short-term deferred revenue reflect the earlier pricing actions that quickly appeared in product revenue, and they are now beginning to appear in service revenue. The pricing benefit more than offset various service revenue headwinds, including suspending services in Russia, an increase in the average number of days between when a customer purchases and subsequently activates a security service contract, and the impact of contract manufacturers delaying deliveries to later in the quarter, which limits our service revenue on new sales recognized in the quarter.
With the growth and pricing benefits more than offsetting these headwinds, we expect service revenue growth will continue to accelerate through 2022 and into next year. As summarized on slide six, total revenue in the Americas increased 23%, EMEA revenue increased 28%, and APAC posted revenue growth of 42%. Despite macro conditions that may be more readily impacting other industries, our pipeline growth remains strong.
In particular, EMEA's pipeline growth indicates continued strength in our European business. Moving to a summary of our success with the large enterprises. Large enterprises continue to favor Fortinet's leading cost for performance advantage and are increasingly more appreciative of our integrated platform. The platform strategy allows customers to converge networking functionality with security capabilities and consolidate multiple point products.
Our success with large enterprise customers includes: Global 2000 bookings growth of over 65% year-over-year and on a rolling 4-quarter basis; large enterprise booking growth of over 55% year-over-year and on a rolling 4-quarter basis; and the number of deals of $1 million increased over 50% to 122 deals and the total billings value of these transactions doubled. Secure SD-WAN bookings grew over 60%, reflecting the convergence of networking and security as well as a strong ROI for our customers.
OT bookings were up over 75%, reflecting the continued response to the elevated threat environment. Shifting to billings. Billings of $1.3 billion were up 36%, as Ken pointed out, representing the fifth consecutive quarter of billings growth in excess of 30%. I'll pause here to offer thoughts on product refresh cycles and their impact on our financial results. Specifically, we do not believe new product releases, driving near-term spike in our top line growth.
Rather, we believe the continual nature of our product releases drives long-term growth. For example, each new ASIC is included in a series of products released over several years. Our most recent ASIC chip, the NP7 security processing unit, was introduced in Q1 of 2020. Including the 4800F announced today, we have released nine high-end core platform products with the NP7 chip. And over the next several quarters, we will release several additional mid-range and high-end products with the NP7.
And lastly, I would note that since the start of 2019, we have released over 23 new FortiGate models. While some of our competitors which have much shorter product SKU list, may have shown clear signs of product refresh cycles. Our strong long-term performance illustrates an extended series of overlapping product maturity curves. Core platform billings were up 32% and accounted for 69% of total billings. As shown on slide seven, midrange FortiGate posted very strong billings growth with the shift mixing five points in their favor, driven by demand as well as supply availability.
Platform extension billings were up 44%, accounted for 31% of total billings, a mix shift of over 1.5 points. Average contract term was up one month year-over-year to 29 months, driven by the strength from large enterprise customers and the 50% plus increase in the number of deals greater than $1 million. Worldwide, government billings grabbed the largest share of the mix at 15% and were up 45%. The top five verticals accounted for 60% of total billings.
Moving back to the income statement. Total gross margin of 76.5% exceeded the midpoint of the guidance range by approximately 125 basis points. Even as component, labor and freight costs increased, and the year-over-year revenue mix shifted two points to product revenue from higher-margin service revenue. Product gross margin of 61.9% was up 20 basis points year-over-year and 450 basis points sequentially. As pricing actions, product mix and lower discounting offset higher component and other costs.
Service gross margin of 85.9% was down 100 basis points due to increased costs associated with the expansion of our data center footprint as well as labor costs and other costs, partially offset by benefits from FX and some of the earlier pricing actions. Operating margin of 24.8% exceeded the midpoint of the guidance range by approximately 200 basis points. The year-over-year comparison saw the FX benefit offset by lower gross margins, increased travel and marketing costs and other costs.
Headcount increased 27% to 11,508. Looking at the statement of cash flow summarized on slides eight and nine. Free cash flow was $284 million and was impacted by increases in DSO and cash taxes. DSO increased 14 days year-over-year and five days sequentially to 80 days due to the change in billing linearity driven by the timing of inventory deliveries from contract manufacturers.
And new R&D capitalization rules increased second quarter cash taxes by $85 million to $110 million. Second half cash taxes of approximately $135 million are expected to be more evenly spread across the third and fourth quarters. For the first half of the year, our adjusted free cash flow margin, which excludes real estate spending was 34%. Capital expenditures for the quarter were $39 million, including $21 million for real estate investments.
We repurchased approximately 14.4 million shares of our common stock for a cost of $800 million, bringing the total year-to-date shares repurchased to 25.8 million for a total cost of $1.5 billion. The Board increased the share repurchase authorization by $1 billion. The remaining repurchase authorization is now $1.03 billion. Inventory turns at 3.1 times were up 0.5 turn year-over-year and down to 0.5 turn sequentially. Moving to bookings and backlog.
As a reminder, backlog is excluded from current quarter billings and revenue. Nonetheless, is it expected to provide increased visibility in the top line tailwind in future quarters. Bookings were up 42% to $1.4 billion. Total backlog of $350 million is up $72 million sequentially and reflects very strong demand. Of the total backlog, networking equipment accounted for about 50%, while FortiGate accounted for about 40%. We believe our backlog is very strong and sticky.
Existing customers account for over 95% of total backlog, and no single end customer accounts for more than low single digits as a percentage of backlog. There are four deals in backlog, all from previously existing customers with the remaining balance of over $2 million, put that together account for only 6% of total backlog. Just 4% of ending Q1 backlog was canceled in Q2 and about half the deals in the backlog have been partially fulfilled suggesting that double ordering is not a significant contributor to backlog.
Consistent with the first quarter, we shipped approximately 60% of the prior quarter's backlog in the current quarter as our operation and R&D teams did an excellent job navigating the tough supply chain environment. Nonetheless, we still expect supply chain constraints to be challenging throughout the remainder of the year. We are continuing to address the supply chain challenges in a number of ways, including by increasing inventory purchase commitments, redesigning products, qualifying additional suppliers and certain pricing actions.
We believe that even with these actions, demand will continue to outstrip supply. As a result, we expect backlog to continue to increase in 2022. And while the situation is very dynamic, we believe we will have access to sufficient inventory to meet our guidance. As we balance our pricing actions with the opportunity for continued market share gains, we have passed along most but not all cost increases.
As such, we expect ongoing gross margin volatility from these increases as well as shifts in our product mix related to inventory availability. Before reviewing our guidance, let's offer a few Fortinet's specific observations and areas you may have heard discuss elsewhere. In Q2, we noticed certain larger transactions with increased or elongated negotiating cycles. Also, linearity pushed to later in the quarter and later in the last month of the quarter, mainly due to supply constraints in the deliveries.
Lastly, close rates were strong, and importantly, the aggregate value of deals that pushed were within our historical norms. Now I'd like to review our outlook for the third quarter as summarized on slide 10, which is subject to the disclaimers regarding forward-looking information that Peter provided at the beginning of the call. For the third quarter, we anticipate our solid third quarter pipeline growth across deal types, sizes and geographies to support the following: bookings in the range of $1.455 billion to $1.485 billion, which at midpoint represents bookings growth of 36%.
Billings in the range of $1.385 billion to $1.415 billion, which represents growth of 32%. Revenue in the range of $1.105 billion to $1.135 billion, which represents growth of 29%. Non-GAAP gross margin of 75% to 76%; non-GAAP operating margin of 25% to 26%, non-GAAP earnings per share of $0.26 to $0.28, which assumes a share count of between 810 million and the 820 million. We estimate third quarter capital expenditures between $105 million and $115 million.
We expect a non-GAAP tax rate of 17%. For the full year, we anticipate backlog that could approach or possibly exceed $500 million. That will be offset by robust industry growth, pipeline strength and market share gains, fueling our growth and supporting the following: billings in the range of $5.560 billion to $5.640 billion, which at the midpoint represents growth of 34%; revenue in the range of $4.350 billion to $4.400 billion, which represents growth of 31%.
Total service revenue range of $2.620 billion to $2.670 billion, which represents growth of 27% and implies full year product revenue growth of 38%. We expect non-GAAP gross margin of 75% to 76%; non-GAAP operating margin of 25% to 26%. Non-GAAP earnings per share of $1.01 to $1.06, which assumes a share count of between 810 million and 820 million.
We estimate full year capital expenditures between $300 million and $330 million. We expect our non-GAAP tax rate to be 17%. We expect cash taxes for the year to be $265 million. As I mentioned earlier, cash taxes paid are higher in 2022 due to the new R&D capitalization rules in the U.S. Along with Ken, I'd like to thank our partners, customers, suppliers, all members of the Fortinet team for all their hard work, execution and success.
I'll now hand the call back over to Peter to begin the Q&A session.
