Fortinet ((FTNT)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Fortinet’s recent earnings call conveyed a positive sentiment, underscoring the company’s robust growth in revenue and billings, primarily driven by its Unified SASE and SecOps segments. Despite facing challenges such as service revenue growth deceleration and foreign exchange impacts, the overall outlook remains optimistic due to Fortinet’s strong performance and promising future growth potential.
Strong Revenue and Billings Growth
Fortinet reported a significant increase in total billings by 15% to $1.78 billion and revenue by 14% to $1.63 billion. This growth was largely fueled by the impressive performance in Unified SASE and SecOps, which saw growth rates of 21% and 31%, respectively, highlighting the company’s strategic focus on these areas.
Non-GAAP Operating Margin Success
The company achieved a commendable non-GAAP operating margin of 33.1%, surpassing its guidance range by 60 basis points. This success reflects Fortinet’s operational efficiency and ability to manage costs effectively, even amidst challenging market conditions.
Large Enterprise Customer Growth
Fortinet experienced a notable expansion in its large enterprise customer base, with the number of deals exceeding $1 million increasing by 29%. The total dollar value of these deals grew by 51%, indicating strong demand and confidence in Fortinet’s solutions among large enterprises.
Recognition in Industry
Fortinet’s leadership in the industry was reaffirmed as it was named a leader in the 2025 Gartner Magic Quadrant for SASE platform and recognized in five different network security Magic Quadrants. This recognition underscores Fortinet’s commitment to innovation and excellence in network security.
Growth in AI and Cloud Services
The company continues to invest in AI and cloud services, boasting over 500 AI patents and launching new services such as FortiAI-Protect and FortiAI-Assist. Additionally, Fortinet expanded its FortiCloud offerings with new products like FortiIdentity, FortiDrive, and FortiConnect, positioning itself as a leader in AI-driven security solutions.
Service Revenue Growth Deceleration
Despite strong product sales, Fortinet faced a slowdown in service revenue growth, attributed to prior deferred revenues from the COVID period. This deceleration presents a challenge that the company is addressing as it adapts to changing market dynamics.
Impact of Foreign Exchange
The company’s operating margin experienced a decline year-over-year due to foreign exchange headwinds, primarily from a weaker U.S. dollar and costs associated with recent acquisitions. This impact highlights the challenges of operating in a global market with fluctuating currency values.
Challenges in Firewall Upgrade Cycle
Fortinet is approximately 40% to 50% through its 2026 firewall upgrade cycle, facing specific challenges in predicting the refresh of lower-end devices. This uncertainty poses a challenge in maintaining consistent growth in this segment.
Forward-Looking Guidance
For the third quarter, Fortinet projects billings between $1.76 billion and $1.84 billion, representing 14% growth at the midpoint, and expects revenue to be between $1.67 billion and $1.73 billion, a 13% growth at the midpoint. The company also forecasts a non-GAAP gross margin of 80% to 81% and a non-GAAP operating margin of 32.5% to 33.5%. For the full year, Fortinet raised its billings guidance midpoint by $100 million, with revenue expected to be between $6.675 billion and $6.825 billion, indicating confidence in sustained growth.
In summary, Fortinet’s earnings call painted a picture of strong growth and positive sentiment, driven by impressive performance in key segments and strategic investments in AI and cloud services. While challenges such as service revenue deceleration and foreign exchange impacts persist, Fortinet’s leadership in the industry and forward-looking guidance suggest a promising future for the company.