A class action lawsuit was filed against Fortinet (FTNT) on September 22, 2025. The plaintiffs (shareholders) alleged that they bought FTNT stock at artificially inflated prices between November 8, 2024, through August 6, 2025 (Class Period) and are now seeking compensation for their financial losses. Investors who bought Fortinet stock during that period can click here to learn about joining the lawsuit.
Meet Your ETF AI Analyst
- Discover how TipRanks' ETF AI Analyst can help you make smarter investment decisions
- Explore ETFs TipRanks' users love and see what insights the ETF AI Analyst reveals about the ones you follow.
Fortinet is an American cybersecurity company that offers security solutions like firewalls, endpoint security, and intrusion detection systems. The company’s flagship product, FortiGate, is a physical firewall with a support life of roughly 10 years. After the end-of-support (EOS) period, Fortinet stops offering updates and hardware support, encouraging customers to upgrade to newer models, thus boosting its revenue.
The company’s claims about the refresh cycle of FortiGate firewall are at the heart of the current complaint.
Fortinet’s Misleading Claims
According to the lawsuit, Fortinet and four of its current and/or former senior officers (the Defendants) repeatedly made false and misleading public statements throughout the Class Period. In particular, they are accused of omitting truthful information about a so-called “refresh cycle” involving approximately 650,000 FortiGate firewalls, from SEC filings and related material.
During an earnings call held at the beginning of the Class Period, Fortinet’s former CFO stated that in 2026, many FortiGate products would reach the end of their support, and customers were expected to begin replacing them in 2025.
Later, at the company’s Analyst Day conference held on November 18, 2024, Fortinet’s former Chief Accounting Officer explained that the sharp increase was due to 11 high-volume models reaching the end of support and the company’s overall growth, which made the numbers higher.
Finally, at the Morgan Stanley Technology, Media & Telecom Conference held on March 4, 2025, Fortinet’s former CFO reiterated a similar stance. He stated that an unusually large number of products would reach the end of support in 2026, about ten times the average of the past decade, and another, smaller group would follow in 2027. He added that the company was encouraged by the large refresh cycle, since it would meaningfully boost its future sales.
However, subsequent events (detailed below) revealed that the defendants had understated or concealed the fact that the actual size of the refresh cycle would not be as profitable as they had claimed, since it involved older products that constituted only a small portion of the company’s business.
Plaintiffs’ Arguments
The plaintiffs maintain that the defendants deceived investors by lying and withholding critical information about the company’s business and prospects during the Class Period. Importantly, the defendants allegedly misled investors and concealed the fact that they lacked an accurate understanding of how many FortiGate firewalls were actually eligible for upgrades.
The information became clear after the markets closed on August 6, 2025, when the company held an earnings call to discuss its second-quarter fiscal 2025 results. In this context, Fortinet admitted that the refresh was unlikely to have a significant business impact, since it involved products that were 12 to 15 years old and represented only a small portion of the company’s business from a period when Fortinet was 5 to 10 times smaller. Following the news, FTNT stock declined 22% the following day.
To conclude, the defendants misled investors into believing that the refresh would unfold gradually over two years, while it actually rushed through about half of it within just a few months, completing this by the end of the second quarter of 2025. Due to these issues, FTNT stock has lost 14.2% year-to-date.
