Financial Data and Key Metrics Changes - Total billings grew by 18% to $2.37 billion in Q4 2025, driven by strong growth in Unified SASE and operational technology security [15][22] - Total revenue increased by 15% to $1.91 billion, with product revenue up over 20% to $691 million and service revenue growing 12% to $1.21 billion [16][17] - Operating margin was strong at 37.3%, exceeding guidance due to better-than-expected revenue growth and cost management [21][22] - Free cash flow reached $577 million, representing a margin of 31% [22][24] Business Line Data and Key Metrics Changes - Unified SASE billings grew 40%, representing 27% of total billings, indicating strong demand for cloud security solutions [8][15] - Operational technology solutions saw billings growth of over 25%, reflecting broad-based demand for both hardware and software [10][16] - AI-driven SecOps billings grew 6% in Q4 and 22% for the full year, with annual recurring revenue (ARR) up 21% [10][16] Market Data and Key Metrics Changes - The U.S. and Europe were the largest contributors to growth in $1 million-plus deals, each delivering more than 30% growth [16] - 7,200 new organizations selected the unified FortiOS platform, reinforcing the company's strong position across all market segments [16] Company Strategy and Development Direction - The company aims to continue growing faster than the overall market, with a target of achieving billings and revenue CAGR above 12% [11][27] - Fortinet is positioned as a leader in the 2025 Gartner Magic Quadrant for SASE platform, with a focus on integrating networking and security [10][11] - Continued investment in R&D across custom silicon, OS convergence, AI-driven security, and Fortinet-owned cloud infrastructure supports rapid innovation and organic growth [13][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth drivers for 2026, citing strong demand across various sectors, including AI and operational technology [33][34] - The company is well-prepared for supply chain challenges, maintaining healthy margins and inventory levels [42][43] - Management believes that the Sovereign SASE market presents a significant growth opportunity, as competitors have not yet entered this space [32][50] Other Important Information - The company reaffirmed its commitment to the Rule of 45 for the seventh consecutive year, indicating strong financial health [24][27] - Pricing actions have been implemented, with expected increases between 5% and 20% on specific products, which will positively impact service revenue over time [73][84] Q&A Session Summary Question: What drove the strength in Unified SASE billings and the strong guidance for 2026? - Management highlighted strong growth in Sovereign SASE and the unique advantages of their integrated platform as key drivers [31][32] Question: How is the company navigating the current environment regarding memory prices? - The company has prepared for supply chain issues and maintains a healthy margin, adjusting prices as necessary [42][43] Question: What is the revenue mix between Sovereign and public SASE? - Management indicated that the Sovereign SASE market is likely larger than the public SASE market, with strong growth expected [50] Question: How does the company view the potential for cannibalization between SASE and traditional products? - Management believes SASE will complement rather than cannibalize traditional networking and security solutions, creating additional business opportunities [68][70] Question: What are the expected pricing actions for 2026? - Pricing for appliances is expected to increase between 5% and 20%, depending on the product [73][84]

Financial Data and Key Metrics Changes - Total billings grew by 18% to $2.37 billion in Q4 2025, driven by strong growth in Unified SASE and operational technology security [13][20] - Total revenue increased by 15% to $1.91 billion, with product revenue up over 20% to $691 million and service revenue growing 12% to $1.21 billion [15][21] - Operating margin was strong at 37.3%, exceeding guidance, while gross margin was 80.3% [20][22] - Free cash flow reached $577 million, representing a margin of 31% [20][23] Business Line Data and Key Metrics Changes - Unified SASE billings grew 40%, representing 27% of total billings, indicating strong demand for cloud security solutions [6][15] - Operational technology solutions saw billings growth of over 25%, driven by demand for both hardware and software [9][14] - AI-driven SecOps billings grew 6% in Q4 and 22% for the full year, with annual recurring revenue (ARR) up 21% [9][15] Market Data and Key Metrics Changes - The U.S. and Europe were the largest contributors to growth in $1 million-plus deals, each delivering more than 30% growth [14] - 16% of large enterprise customers purchased FortiSASE, an increase of over 50%, highlighting continued expansion [13][15] - The company maintains a leading position in the firewall market with a 55% unit market share [5] Company Strategy and Development Direction - The company aims to continue growing faster than the overall market, targeting a billings and revenue CAGR above 12% [10][26] - Focus on integrating networking and security through FortiOS, which enhances performance and reduces total cost of ownership [6][12] - Continued investment in R&D, particularly in AI-driven security and quantum readiness, supports rapid innovation and organic growth [12][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustained growth driven by strong demand across cybersecurity markets, including Secure Networking and Unified SASE [11][32] - The company anticipates service revenue growth to accelerate in the second half of 2026, driven by product revenue growth [24][26] - Management highlighted the importance of addressing supply chain challenges and maintaining healthy margins through strategic pricing [41][42] Other Important Information - The company has a disciplined approach to capital allocation, with a focus on maintaining the Rule of 45 and strong free cash flow generation [12][13] - A $1 billion increase in the authorized stock repurchase amount was approved by the board of directors [20] Q&A Session Summary Question: What drove the strength in Unified SASE billings and the strong guidance for 2026? - Management attributed the 40% growth in Unified SASE to unique advantages such as Sovereign SASE and the integration of network security, SD-WAN, and SASE on a single OS [30][31] Question: How is the company navigating the current environment regarding memory prices? - The company has prepared for supply chain issues by maintaining inventory and adjusting prices to manage margins effectively [41][42] Question: What is the revenue mix between Sovereign and public SASE? - Management indicated that the Sovereign SASE market is likely larger than the public SASE market, with strong growth expected due to a lack of competition in this area [49] Question: How does the company view the potential for AI to impact cybersecurity? - Management sees AI as an opportunity to enhance cybersecurity measures and control data leakage, with significant demand for AI-driven solutions [36][38] Question: What is the company's approach to M&A? - The company remains open to M&A opportunities, particularly in secure operations, but emphasizes a disciplined approach to acquisitions [86]

Core Insights - Fortinet reported strong quarterly earnings of 81 cents per share, exceeding the consensus estimate of 74 cents [2] - Quarterly revenue reached $1.91 billion, surpassing the Street estimate of $1.86 billion [2] Financial Performance - Product revenue increased by 20% year-over-year to $691 million [4] - Total billings grew by 18% to $2.37 billion [4] - Unified SASE billings experienced significant growth of 40% [4] - Non-GAAP operating margin stood at 37% [4] Future Outlook - For fiscal 2026, Fortinet anticipates adjusted EPS in the range of $2.94 to $3, aligning with the $2.94 estimate [3] - Revenue expectations for fiscal 2026 are set between $7.5 billion and $7.7 billion, compared to the $7.51 billion estimate [3] Market Reaction - Following the earnings report, Fortinet's stock rose by 2.69% to $81.62 in extended trading [4]

| . | | --- | | . | | = . | | . | | . 1 ロ | | ロ . - | | . | Q4 2025 Earnings Presentation February 5, 2026 Safe Harbor Statement Information, statements and projections contained in these presentation slides and related conference call concerning Fortinet's business outlook, the first quarter and full year 2026 guidance, and future prospects and expectations are forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding any indications rela ...

Press Release Fortinet Reports Strong Fourth Quarter and Full Year 2025 Financial Results Fourth Quarter 2025 Highlights Full Year 2025 Highlights SUNNYVALE, Calif. - February 5, 2026 - Fortinet® (Nasdaq: FTNT), a global cybersecurity leader driving the convergence of networking and security, today announced financial results for the fourth quarter of 2025 and full year ended December 31, 2025. "We are pleased with our strong finish to the year, highlighted by an excellent fourth quarter driven by broad- ba ...

Core Insights - Fortinet reported strong financial results for Q4 2025 and the full year, with significant growth in revenue and billings, driven by high demand across its product portfolio [3][4][7]. Financial Performance - Q4 2025 revenue increased by 15% year-over-year to $1.91 billion, while full-year revenue grew by 14% to $6.80 billion [7]. - Product revenue for Q4 2025 rose by 20% year-over-year to $691 million, and for the full year, it increased by 16% to $2.22 billion [7]. - Billings for Q4 2025 grew by 18% to $2.37 billion, and for the full year, billings increased by 16% to $7.55 billion [7]. - Unified SASE billings surged by 40%, reflecting strong market demand [7]. Profitability Metrics - The GAAP operating margin for Q4 2025 was 33%, while the non-GAAP operating margin was 37% [7]. - For the full year, the GAAP operating margin was 31%, and the non-GAAP operating margin was 35% [7]. - Free cash flow for the year reached $2.21 billion, exceeding the 'Rule of 45' for the sixth consecutive year [7]. Share Repurchase Program - Fortinet's Board of Directors authorized an increase in its share repurchase program by $1.0 billion, bringing the total authorized amount to $10.25 billion through February 28, 2027 [6]. Recent Business Developments - Fortinet announced an integrated solution with NVIDIA to enhance AI infrastructure performance [8]. - The company was recognized as a Gartner Peer Insights™ Customers' Choice for Security Service Edge for the third consecutive year [8]. - Fortinet was named the inaugural Google Unified Security Recommended partner for network protection [8]. Guidance - For Q1 2026, Fortinet expects revenue in the range of $1.700 billion to $1.760 billion and billings between $1.770 billion and $1.870 billion [15]. - For the full fiscal year 2026, revenue is projected to be between $7.500 billion and $7.700 billion, with billings expected to range from $8.400 billion to $8.600 billion [15].

Core Viewpoint - Fortinet, Inc. is expected to report a modest earnings beat for Q4, with analysts maintaining a cautious outlook for 2026 due to high expectations in key metrics [1][2][4]. Group 1: Earnings Expectations - Fortinet is scheduled to report its fourth-quarter earnings on February 5, with expectations to exceed consensus billings growth estimates of 12% year-over-year by 1-2% [2][4]. - The anticipated growth is supported by improved survey data, indicating a positive sentiment towards the company's performance [2][4]. Group 2: Analyst Sentiment - Jefferies analyst Joseph Gallo reiterated a Hold rating on Fortinet with a price target of $80.00, reflecting a cautious stance due to the current weak sentiment towards software stocks [1][3]. - The firm is waiting for clearer visibility into potential product refreshes and a rebound in services in the second half of 2026 before becoming more constructive on the stock [3][4]. Group 3: Future Outlook - Several metrics for 2026, including consensus expectations for billings growth (11% YoY), services revenue growth (13% YoY), and operating margins (34%), suggest high expectations that may be challenging to meet [2][4]. - Despite acknowledging Fortinet's potential, analysts believe other AI stocks may offer greater upside potential with less downside risk [5].

Group 1 - Investors are taking a bullish stance on Fortinet (NASDAQ:FTNT), with significant options trades indicating potential upcoming movements in the stock [1] - The overall sentiment among large traders is split evenly, with 37% bullish and 37% bearish positions observed [2] - Major market movers are focusing on a price band between $69.0 and $110.0 for Fortinet over the last three months [3] Group 2 - Insights into volume and open interest reveal key trends in liquidity and interest levels for Fortinet's options, particularly within the strike price range of $69.0 to $110.0 [4] - Fortinet is a cybersecurity vendor with a diverse range of product offerings, serving over 800,000 customers globally [5] - Professional analysts have set an average price target of $86.4 for Fortinet based on recent evaluations [7] Group 3 - Current trading volume for Fortinet stands at 2,972,948, with the stock price at $77.94, reflecting a decrease of -4.12% [8]

Core Insights - Fortinet (FTNT) is set to report its fourth-quarter 2025 results on February 5, with projected revenues between $1.825 billion and $1.885 billion, indicating a year-over-year growth of 11.91% based on the Zacks Consensus Estimate of $1.86 billion [1][8] - The company anticipates non-GAAP earnings per share in the range of 73-75 cents, with the consensus estimate at 74 cents, suggesting limited growth compared to the previous year [2][8] - Fortinet has consistently exceeded earnings expectations in the past four quarters, with an average surprise of 14.67% [2] Revenue and Earnings Guidance - Fortinet forecasts billings between $2.185 billion and $2.285 billion, reflecting approximately 12% growth at the midpoint, indicating steady performance [3] - The anticipated non-GAAP operating margins for the fourth quarter are between 34.5% and 35.5%, slightly down from the previous quarter's record margin of 37% due to planned infrastructure investments of $60 million to $110 million [6][8] Strategic Developments - The company has made significant announcements, including the launch of its Secure AI Data Center solution in partnership with Arista Networks, which promises faster deployments and improved performance [4] - Integration with NVIDIA BlueField-3 data processing units allows FortiGate virtual firewalls to operate directly on DPUs, addressing the growing AI data center market [5] - The launch of the Crime Stoppers International Cybercrime Bounty program highlights Fortinet's leadership in public-private cybersecurity collaboration [5] Market Position and Performance - The FortiSASE platform has shown over 100% year-over-year billing growth in the third quarter, indicating strong momentum despite different margin profiles compared to traditional hardware sales [6]

Core Viewpoint - Fortinet, Inc. has been downgraded by Scotiabank from Sector Outperform to Sector Perform, with a price target set at $85, due to concerns that the optimism surrounding its growth in 2026 is overstated [1][2]. Company Overview - Fortinet is recognized as a strong cybersecurity company that provides enterprise-level next-generation firewalls and network security solutions, utilizing artificial intelligence in its products [2][3]. - The company is considered legendary in its field, with a compelling offering in core secure networking [1]. Analyst Insights - The downgrade is based on recent quantitative analysis and feedback from Chief Information Security Officers (CISOs) at mid to large-sized enterprises, indicating a less optimistic outlook for Fortinet in 2026 [2]. - Analysts suggest that while Fortinet has potential, other AI stocks may present greater upside potential and lower downside risk [2].