Fortinet Earnings Call Transcripts
Fiscal Year 2026
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Strong global demand drove hardware and SASE growth, with product revenue up 52% and OT billings up 55%. Innovation in AI, secure networking, and integrated solutions is fueling expansion, while new markets and upsell opportunities are expected to drive future growth.
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Q2 2026 saw billings up 33% and revenue up 26%, with product revenue surging 52% and free cash flow tripling to $966M. Strong demand across Secure Networking, SASE, and OT, plus AI-driven security, led to raised full-year guidance and record margins.
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Strong billing and product growth are driven by AI adoption, internal segmentation, and OT security. Integrated SASE and SD-WAN solutions, cost advantages, and sovereign SASE expansion are fueling market share gains, with upsell, cross-sell, and new customer acquisition supporting sustained momentum.
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Quantum computing poses imminent risks to current encryption, with attackers already exploiting vulnerabilities through 'harvest now, decrypt later' tactics. Fortinet's solutions enable seamless, cost-free adoption of post-quantum cryptography with minimal performance impact, supporting phased migration and regulatory compliance across critical sectors.
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AI data center demand and data sovereignty are driving global deployments, with low power consumption and unified OS as key advantages. Product mix is shifting toward firewalls and OT security, while service bundling and sovereign SASE solutions expand market reach. Inventory and supply chain strategies support strong demand and a positive outlook.
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Q1 2026 saw billings up 31% and revenue up 20%, with strong growth in Secure Networking, OT, and SASE segments. Record free cash flow and robust margins led to raised full-year guidance, driven by AI adoption and platform differentiation.
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AI and proprietary ASICs are driving innovation and market share gains, with unified SASE and SD-WAN outpacing competitors. The business targets >12% CAGR, leverages a diversified customer base, and continues to invest in AI, quantum, and operational efficiency, supporting strong growth and profitability.
Fiscal Year 2025
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Q4 and full-year results exceeded guidance, with 18% billings and 15% revenue growth in Q4, driven by strong Unified SASE and Secure Networking demand. Operating and gross margins remained robust, and 2026 guidance projects continued double-digit growth, supported by product innovation and disciplined capital allocation.
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Third-quarter billings and revenue grew 14% year-over-year, with record operating margins and strong SaaS momentum. Guidance calls for continued double-digit growth, robust cash flow, and ongoing market share gains across all business pillars, supported by innovation and integrated solutions.
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AI-driven security and integrated network solutions are fueling strong growth, with SASE and OT security as major drivers. Upselling and cross-selling strategies, combined with innovation and organizational scale, support above-market growth projections and continued margin strength.
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The discussion highlighted strong growth in unified SASE, AI-driven security, and OT, with a focus on innovation and expanding sales capacity. Refresh cycles are less central to growth, which is now driven by new technology adoption and market share gains.
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Q2 saw 15% billings and 14% revenue growth, with strong enterprise demand and expanding SASE and AI-driven segments. Guidance for the year was raised, margins remained robust, and significant investments in infrastructure and innovation continue to drive growth.
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Cybersecurity demand remains strong and resilient, driven by increased device connectivity, AI, and OT/IoT growth. Integrated platforms and infrastructure investments support rapid SaaS and SASE expansion, while pipeline management and upgrade cycles are carefully monitored.
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Leadership transition and distributed sales input are shaping a more data-driven, cautious outlook amid macro uncertainty. Strong Q1 results were driven by product refresh cycles and OT growth, while SaaS and SecOps adoption continue to expand. AI and hybrid infrastructure are enhancing efficiency and competitiveness.
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Revenue grew 14% year-over-year with record operating margin and free cash flow. Unified SASE and AI-driven SecOps segments showed strong growth, while guidance remains cautious due to macro and FX headwinds. Large enterprise and EMEA led performance.
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The discussion highlighted a major firewall upgrade cycle, rapid SASE adoption, and strong global demand, with integrated platform and ASIC innovation driving differentiation. AI and OT security are key growth areas, and the company targets a 12%+ CAGR over the next 3–5 years.
Fiscal Year 2024
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Q4 2024 saw record operating margin and strong revenue growth, led by product and unified SASE performance. FY2025 guidance anticipates double-digit growth, with ongoing investments in AI, acquisitions, and channel expansion. Tariff and macro uncertainties remain.
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Growth is driven by three business pillars, with hybrid security models and a major 2026 refresh cycle expected to boost billings. Investments in proprietary infrastructure and cross-sell opportunities support a 12%+ CAGR and higher margins, as security demand remains strong amid rising threats.
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Management outlined new 3-5 year targets for double-digit revenue growth, robust margins, and significant product refresh-driven opportunities. SASE, SecOps, and AI innovation are central to the strategy, with strong momentum in key verticals and ongoing investments in sales and infrastructure.
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Leadership in network security, SD-WAN, and OT security is reinforced by proprietary technology, a unified platform, and strong customer loyalty. The new midterm model targets 12%+ CAGR, >30% operating margins, and leverages a major firewall refresh cycle for upsell. Rapid SASE and SecOps growth, global channel strength, and a culture of innovation drive sustained expansion.
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Q3 2024 saw record gross and operating margins, 13% revenue growth, and strong service revenue. Security operations and SASE segments led growth, with robust performance in manufacturing and EMEA. Guidance for Q4 and full year was raised, reflecting continued momentum.
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Record Q2 operating and gross margins were achieved, with 11% revenue growth and strong service and software performance. Acquisitions of Lacework and Next DLP expanded the addressable market, while guidance anticipates continued growth and a major hardware refresh cycle in 2025.
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Macro pressures persist but early signs of recovery are visible, with demand for firewalls and SASE solutions evolving to address new use cases. Platform convergence, AI integration, and hybrid deployment models are driving growth, while financial performance remains solid and channel expansion is a key focus.