Fortinet ((FTNT)) has held its Q1 earnings call. Read on for the main highlights of the call.
Fortinet’s recent earnings call conveyed a strong sense of growth and market leadership, despite facing macroeconomic uncertainties and potential tariff impacts. The company remains optimistic about its innovation and customer acquisition strategies, which continue to drive its success.
Strong Revenue and Growth
Fortinet reported an impressive 14% revenue growth, achieving a record first-quarter operating margin of 34%. Additionally, the company recorded a free cash flow of $783 million, representing a margin of 51%. These figures underscore Fortinet’s robust financial health and operational efficiency.
Unified SASE and Secure Operations Growth
The company’s Unified SASE billings grew by 18%, now accounting for 25% of the business. Meanwhile, AI-driven secure operations billings increased by 29%, representing 10% of the business. These growth areas highlight Fortinet’s strategic focus on expanding its service offerings in high-demand sectors.
Market Leadership in Multiple Segments
Fortinet maintained its position as the leading deployed firewall vendor globally and continues to lead in the SD-WAN and OT security markets. This leadership is a testament to the company’s strong product offerings and market strategy.
New Customer Acquisition
The company experienced a 14% increase in new customer acquisitions, adding over 6,300 new logos. This growth was driven by strategic investments in channel partners, showcasing Fortinet’s effective customer engagement and expansion strategies.
Innovative Product Launch
Fortinet announced the launch of the FortiGate 700G series, a high-performance firewall designed for mid-size businesses and distributed enterprises. This new product is expected to strengthen Fortinet’s portfolio and attract a broader customer base.
Macroeconomic Uncertainty
The company acknowledged hesitancy in sales due to the broader economic outlook and geopolitical uncertainties. These factors could potentially impact Fortinet’s top-line results, although the company remains focused on navigating these challenges.
Tariff Concerns
Potential future U.S. tariffs could impact hardware sales to U.S. customers. While no immediate effects are expected, Fortinet is monitoring the situation closely to mitigate any potential impacts.
Sequential Decline in Service Revenue
Service revenue experienced a slight sequential decline, attributed to fewer days in the first fiscal quarter. This decline is seen as a temporary fluctuation rather than a long-term trend.
FX Headwinds
The weakening U.S. dollar is anticipated to create an operating margin headwind of approximately 120 basis points in the second quarter. Fortinet is preparing to address these foreign exchange challenges to maintain its financial performance.
Forward-Looking Guidance
Looking ahead, Fortinet provided guidance for the second quarter and full year of 2025. The company expects second-quarter billings between $1.685 billion and $1.765 billion, with revenue between $1.59 billion and $1.65 billion. For the full year, billings are projected to range from $7.2 billion to $7.4 billion, with revenue between $6.65 billion and $6.85 billion. Despite the challenges, Fortinet remains optimistic about achieving the rule of 45 for the sixth consecutive year.
In summary, Fortinet’s earnings call highlighted strong growth and market leadership, tempered by macroeconomic and tariff concerns. The company’s innovative products and customer acquisition strategies continue to drive its success, positioning it well for future growth.