Track market-moving stories before they get noisy

Palo Alto Networks crushed revenue estimates and still got punished, while peers with weaker numbers barely flinched. The gap between what bulls expected and what the company delivered reveals a fault line running through the entire cybersecurity rally.

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Cybersecurity stocks are trading lower Wednesday morning as a marquee earnings beat drew heavy selling, and the reaction looks like a repricing of one name’s premium while sector peers move far less. The headline growth number was strong, though the metric bulls watch closest came in modestly light.

Palo Alto Networks (NASDAQ:PANW | PANW Price Prediction) stock is down 8% to $332.30 after the company reported fiscal Q4 2026 results Tuesday afternoon. The Amplify Cybersecurity ETF (NYSEARCA:HACK) is down 2% to $109.32, showing much softer selling across the sector basket. The Invesco QQQ Trust (NASDAQ:QQQ) is down 0.1% to $706.66, leaving the large-cap tech tape barely lower on the session as Palo Alto Networks stock falls several times harder than its own sector fund.

Earnings Beat With a GAAP Swing Palo Alto Networks reported revenue of $3.41 billion, up 34% year over year and ahead of the $3.35 billion consensus. Non-GAAP EPS came in at $1.02 versus $0.98 expected, with adjusted profit of $853 million versus $673 million a year earlier. The company also announced the closing of its Console acquisition, an AI-native agentic workflow platform intended to extend Cortex.

On a GAAP basis, Palo Alto posted a net loss of $282 million, or $0.35 per share, against net income of $254 million a year earlier. The swing came from $281 million of acquired intangible amortization and a $524 million fair value change on convertible notes acquired from CyberArk. Operating cash flow at Palo Alto reached $1.357 billion in the quarter, with a full-year adjusted free cash flow margin of 38.4%.

Palo Alto Networks’ next-generation security annual recurring revenue rose 63% year over year to $9.1 billion, with nearly $1 billion of net new next-generation security ARR added in the quarter. Remaining performance obligations at Palo Alto Networks rose 34% to $21.2 billion.

Fiscal 2027 guidance from Palo Alto Networks calls for revenue of $14.1 billion to $14.2 billion, non-GAAP EPS of $4.16 to $4.19 per share against $3.84 in fiscal 2026, and NGS ARR of $11.075 billion to $11.175 billion. Adjusted free cash flow margin is guided to 38%, down from 38.4%.

ARR Deceleration Broke the Bull Case Raymond James reiterated a Market Perform rating on Palo Alto and called the results generally solid, while noting next-generation security ARR came in modestly below what it believed buy-side investors expected. Analyst Adam Tindle said the figure would have needed to reach closer to $9.15 billion to represent an accelerating beat, stating that “the beat decelerated in a very healthy environment.”

Tindle noted the ARR trajectory underpins the bull case that Palo Alto Networks is decoupling from traditional firewall comparisons and behaving like a high-growth next-generation software company. He benchmarked that growth against CrowdStrike, whose total ARR growth is running in the mid-20% range with net new ARR growth above 50%. That comparison explains why the market treated a headline beat at Palo Alto Networks as a disappointment.

CEO Nikesh Arora highlighted the company’s platform expansion in the release, citing “nearly $1 billion of Net New NGS ARR in a single quarter.” The subtext of the reaction is that the buy side had already priced that scale in, leaving Palo Alto Networks with no cushion at the current multiple.

Peer Reaction Stays Muted Meanwhile, CrowdStrike Holdings (NASDAQ:CRWD) stock is down 3% to $208.03, a much softer reaction that leaves the sector picture intact. CrowdStrike stock was up 84% year to date through Tuesday’s close, so today’s drawdown barely dents the run.

Fortinet (NASDAQ:FTNT) stock is down 3% to $157.51, a similar sympathy move consistent with sector rotation. Fortinet stock was up 104% year to date through Tuesday’s close, actually outperforming Palo Alto Networks over that stretch.

Palo Alto stock was up 97% year to date through Tuesday’s close, so a 9% reaction on a decelerating beat lines up with a group that ran hot into the earnings report. The Amplify Cybersecurity ETF’s 2% pullback captures the sector picture cleanly for the day.

What to Watch The unresolved question is whether fiscal 2027 NGS ARR guidance of 22% to 23% growth is enough to sustain the multiple Palo Alto stock carried into the earnings report. Traders can watch for sell-side revisions in the coming sessions that either endorse the guide as conservative or trim expectations further after Tuesday’s call.

The CyberArk integration progress and the newly closed Console acquisition are the operational threads to follow at Palo Alto Networks. Investors should size their positions carefully given the valuation still embedded in the stock after today’s move.

Contact [email protected] for any questions or corrections.

SummaryFortinet stock has surged over 100% in 2026, driven by robust AI-driven cybersecurity demand and strong product revenue growth.FTNT’s free cash flow, billings, and deferred revenue are strong, with gross margins near 80% and a clean balance sheet supporting aggressive buybacks.Valuation models (FCFF, FCFE, residual income) converge on an intrinsic value range of $120–150 per share, below the current ~$160 price.I rate FTNT a Hold, as current valuation embeds optimistic growth and return assumptions; a pullback or evidence of sustained high growth would increase my conviction.Editor's note: Seeking Alpha is proud to welcome KRM Insights as a new contributing analyst. You can become one too! Share your best investment idea by submitting your article for review to our editors. Get published, earn money, and unlock exclusive SA Premium access.

5 Followers

Analyst’s Disclosure: I/we have a beneficial long position in the shares of BUG either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

BUG is an ETF that has 8.14% allocation to FTNT. I hold long-term call options in my IRA.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

It has been about a month since the last earnings report for Fortinet (FTNT - Free Report) . Shares have added about 12% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Fortinet due for a pullback? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent catalysts for Fortinet, Inc. before we dive into how investors and analysts have reacted as of late.

Fortinet Q2 Earnings & Revenues Beat Estimates, Increase Y/YFortinet reported second-quarter 2026 non-GAAP earnings per share (EPS) of 90 cents, beating the Zacks Consensus Estimate by 20% and rising 40.6% year over year.

Total revenues of $2.05 billion beat the consensus mark by 9.1% and increased 25.6% year over year, driven by strong demand across customer segments, industry verticals, and geographies. Growth was fueled by accelerating investment in securing AI infrastructure, the convergence of firewall, SD-WAN and SASE technologies into the company's newly defined SASE Firewall platform, and continued strength in operational technology (OT) security amid rising regulatory and critical infrastructure requirements.

Total deferred revenues (current plus long-term portions combined) came in at $7.68 billion, while the current portion was $3.84 billion as of June 30, 2026.

Total billings increased 33.4% year over year to $2.37 billion, led by 34% growth in secure networking, more than 55% growth in OT, 35% growth in Unified SASE and 25% growth in AI-driven security operations.

FTNT's Q2 in DetailSegment-wise, Product revenues increased 51.9% year over year to $773 million, representing 37.7% of total revenues. The acceleration was driven by strong FortiGate unit growth and higher average selling prices as customers shifted toward higher-performing models, along with customer investments to secure AI workloads and support AI data center buildouts.

Service revenues of $1.27 billion grew 13.7% year over year, accounting for 62.3% of total revenues, with growth improving from the prior quarter. The first quarter of 2026 marked the trough for service revenue growth, with a positive trajectory expected going forward as accelerating product revenue feeds through to attached services. Service billings accelerated to 26% growth and total deferred revenues grew 17%. FortiSASE adoption within the large enterprise installed base rose to 90%, with FortiSASE billings growing more than 100% year over year, benefiting from expansion sales, competitive replacements and new large enterprise wins.

Margins of FTNTTotal GAAP gross margin was 80.2%, contracting 50 basis points (bps) year over year. Non-GAAP gross margin came in at 80.9%, contracting 70 bps year over year but exceeding the high end of guidance.

GAAP operating margin expanded 560 bps year over year to 33.7% in the second quarter. On a non-GAAP basis, operating margin expanded 490 bps to a second quarter record of 38%, reflecting stronger than expected revenue growth, disciplined cost management and growing efficiencies from internal AI initiatives.

FTNT's Balance Sheet & Cash FlowFortinet exited the second quarter of 2026 with cash and cash equivalents and short-term investments of $4.07 billion, up from $3.29 billion reported at the end of the first quarter of 2026.

Cash flow from operations was $1.04 billion for the second quarter of 2026, up from $451.9 million in the prior year quarter, an increase of 130.9%. Free cash flow of $965.6 million grew 239.9% year over year from $284.1 million in the prior year quarter, reflecting improved linearity, higher billings and strong working capital discipline, representing a free cash flow margin of 47.2%. Adjusted free cash flow reached $995.9 million, up 132.7% year over year, representing a margin of 48.6%.

The company repurchased 1.9 million shares of common stock for $146 million during the second quarter, bringing year-to-date repurchases to 12.5 million shares for $973 million, at an average price of approximately $78 per share. The remaining share repurchase authorization stands at approximately $766 million.

FTNT's Q3 & 2026 GuidanceFortinet expects third-quarter revenues in the range of $2.01-$2.10 billion. Billings are estimated in the range of $2.25-$2.35 billion. The non-GAAP gross margin is expected in the range of 79-81%, while the non-GAAP operating margin is anticipated between 35-37%. Non-GAAP EPS is projected in the range of 83-87 cents.

For 2026, FTNT raised its outlook and now predicts revenues in the range of $8.02-$8.18 billion (up from prior $7.71-$7.87 billion). Service revenues are projected in the range of $5.18 to $5.22 billion. Billings are expected in the range of $9.35-$9.55 billion (up from prior $8.8 to $9.1 billion). The non-GAAP gross margin is expected in the range of 79-81% and the operating margin is projected in the band of 35-37%. Non-GAAP EPS is anticipated to be between $3.41 and $3.47 (up from prior $3.10-$3.16).

How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a upward trend in estimates revision.

The consensus estimate has shifted 13.51% due to these changes.

VGM ScoresCurrently, Fortinet has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock has a score of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

OutlookEstimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Fortinet has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry PlayerFortinet belongs to the Zacks Security industry. Another stock from the same industry, Varonis Systems (VRNS - Free Report) , has gained 12.2% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.

Varonis reported revenues of $180.02 million in the last reported quarter, representing a year-over-year change of +18.3%. EPS of $0.04 for the same period compares with $0.03 a year ago.

For the current quarter, Varonis is expected to post earnings of $0.02 per share, indicating a change of -66.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +4.1% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Varonis. Also, the stock has a VGM Score of D.

Cybersecurity Stocks Are Holding Up as the AI Trade Starts to CrackFortinet NASDAQ: FTNT CFO Christiane Ohlgart said the cybersecurity company’s second-quarter performance was supported by broad-based global demand, accelerating hardware sales and growing adoption of secure networking and unified secure access service edge, or SASE, offerings.

Speaking at a fireside chat, Ohlgart described the quarter as “fantastic,” pointing to demand across geographies and multiple customer use cases. She said growth in FortiGate hardware was particularly strong as organizations expanded networks and sought to improve security for operational technology, software-defined wide-area networking, and artificial intelligence infrastructure.

Get Fortinet alerts:

Time to Sell? 3 Winners With Fading Technical Momentum“We see broad-based demand across all our geos,” Ohlgart said. “We continue to see good demand for multiple use cases,” including OT, SD-WAN improvements, AI infrastructure and AI-enabled networking.

Unified SASE Growth Reflects Hardware and Cloud Strategy Ohlgart said Fortinet is benefiting from its installed base of SD-WAN customers as it seeks to extend those relationships into cloud-delivered SASE services. The company reported that Unified SASE grew 35% and represented about one-quarter of sales, while FortiSASE billings more than doubled, according to the discussion.

As AI Data Breaches Become More Common, This Cybersecurity ETF Is SurgingThe CFO said Fortinet’s approach differs from a cloud-only SASE model by combining cloud security with hardware deployed at the network edge. This model is particularly relevant for customers seeking unified security for both in-network and remote users, she said.

Ohlgart also cited sovereign SASE as an opportunity, especially in Europe, where regulations and customer requirements around control of infrastructure are becoming more important. She said Fortinet’s sovereign SASE pipeline is still developing and is currently smaller than its hybrid opportunity pipeline, but could be supported by telecommunications providers that want to build sovereign environments for customers such as public-sector organizations.

Fortinet’s recently introduced SD-WAN and SASE bundle includes services intended to improve SD-WAN functionality and security, along with a limited SASE license intended to give customers a way to test the cloud platform. Ohlgart said the bundle is designed as a starting point for future SASE upselling rather than an immediate driver of a major jump in billings or annual recurring revenue.

About 90% of Fortinet’s security service edge customers are already within its installed base, Ohlgart said, underscoring the role of existing SD-WAN deployments in the company’s SASE expansion.

Hardware Demand Includes Larger Appliances Fortinet reported product revenue growth of 52%, its second consecutive quarter of acceleration. Ohlgart said the increase was clearly demand-driven and required unit growth, but also reflected customers choosing larger hardware appliances.

“Even if we normalize for price increases, we saw ASP increases for the hardware,” she said, referring to average selling prices. Customers are moving toward “a little bit bigger boxes,” a trend the company has observed since the fourth quarter, she added.

Ohlgart said AI is contributing to this demand, not only through security needs around AI deployments but also because customers expect increased network traffic and are upgrading their infrastructure for greater performance.

The company has also adjusted hardware prices in response to component costs, including memory. Ohlgart said the impact of price increases on billings growth was in the high-single-digit percentage range. While memory prices have stabilized, she said availability remains constrained in some cases, potentially requiring expedited purchasing for certain components. Fortinet evaluates pricing on a product-by-product basis while seeking to remain competitive, she said.

Security, Networking and OT Remain Key Areas Ohlgart said Fortinet’s secure-networking strategy is gaining traction as customers look to consolidate technology, reduce operating complexity and improve their security posture. Fortinet’s switches can be controlled by a FortiGate through its FortiLink technology, enabling security inspection at the entry point to a network, she said.

Customers are increasingly looking beyond the cost of outside technology vendors and considering the internal staffing costs associated with managing fragmented infrastructure, Ohlgart said. Consolidated systems can help organizations operate network and security functions with fewer resources.

Fortinet also reported that OT billings accelerated 55% year over year. Ohlgart said demand spans public-sector organizations, manufacturers and other customers as awareness rises around the security risks facing critical infrastructure and increasingly digitized systems, including electric-vehicle charging stations.

The company uses OT specialists to support its account managers and works with industry partners including Rockwell, Honeywell, Siemens and Schneider Electric, according to Ohlgart.

Addressing concerns around disclosed vulnerabilities, or CVEs, Ohlgart said Fortinet’s large installed base makes it a frequent target and a subject of competitor criticism. She said the company aims to identify vulnerabilities in its own code, disclose them transparently and issue patches quickly. Fortinet is also working on measures such as virtual patching through its intrusion prevention system engine to protect devices before customers apply patches, she said.

Services and Future Growth Ohlgart said service billings grew 26%, while total deferred revenue increased 17% and service revenue rose 14%. She explained that service revenue is largely recognized from the balance sheet, while service billings reflect current-quarter selling activity, including renewals, services attached to hardware and service-only transactions.

Fortinet reported remaining performance obligations of $7.7 billion, up 16% year over year, and current RPO growth of 12%. Ohlgart said average service duration was about 30 months in the second quarter.

Looking toward 2027, Ohlgart said Fortinet sees new markets as the larger potential contributor to growth, including opportunities within its existing customer base as well as markets where it competes against other vendors.

About Fortinet (NASDAQ:FTNT)Fortinet, Inc NASDAQ: FTNT is a multinational cybersecurity company that develops and delivers integrated security solutions for enterprise, service provider and government customers worldwide. Founded in 2000 and headquartered in Sunnyvale, California, the company was co‑founded by Ken Xie and Michael Xie. Ken Xie serves as chairman and chief executive officer, and the company operates through a global sales, channel and services organization to support customers across the Americas, EMEA and Asia‑Pacific.

Fortinet's product portfolio centers on network security appliances and software, with its FortiGate next‑generation firewalls and the FortiOS operating system forming a core platform.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

Continue following MarketBeat

Add MarketBeat as your preferred source on Google to see our latest stories in your feed.

Should You Invest $1,000 in Fortinet Right Now?Before you consider Fortinet, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Fortinet wasn't on the list.

While Fortinet currently has a Hold rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

Enter your email address and we’ll send you MarketBeat’s list of ten stocks set to soar in Summer 2026, despite the threat of tariffs and what's happening in Iran. These ten stocks are incredibly resilient and are likely to thrive in any economic environment.

Get This Free Report

Key Takeaways Fortinet raised 2026 revenues, billings, service revenues and non-GAAP EPS guidance.SASE convergence, firewall refreshes and AI integration are driving broad-based demand.Fortinet's Intel collaboration aims to advance its ASIC roadmap and strengthen supply chain resilience. Fortinet, Inc. (FTNT - Free Report) has given investors fresh reason to pay attention after raising its full-year 2026 guidance on the back of accelerating firewall refresh cycles and surging SASE adoption. The upgraded outlook, delivered alongside second-quarter results, points to durable, broad-based demand across the company's security fabric, and the fundamentals underpinning that demand suggest the stock deserves a place in growth-oriented portfolios in the near term.

Fortinet shares have gained 103.9% in the year-to-date period, outperforming the Zacks Security industry and the broader Computer and Technology sector’s growth of 86.2% and 17.7%, respectively. The rally is best viewed as the market catching up to accelerating billings and guidance rather than a stretched move, making the current entry point still reasonable for new positions.

FTNT’s 6-Month Price Performance
Image Source: Zacks Investment Research

Guidance Raised Across the BoardFollowing second-quarter 2026 results that topped the high end of prior guidance, management lifted full-year revenue guidance to $8.02-$8.18 billion, implying roughly 19% year-over-year growth, compared with the prior outlook of $7.71-$7.87 billion. Billings are raised to $9.35-$9.55 billion, service revenues are projected at $5.18-$5.22 billion, and non-GAAP EPS is anticipated between $3.41 and $3.47. Non-GAAP operating margin guidance stands at 35-37%, with non-GAAP gross margin guided to 79-81%.

The Zacks Consensus Estimate for 2026 earnings stands at $3.40 per share, implying 23.19% year-over-year growth.

For the third quarter, the company guided revenues to be in the range of $2.01-$2.10 billion and non-GAAP EPS to be between 83 cents and 87 cents. Infrastructure investment guidance for the full year was set at $350-$550 million, while full-year cash taxes are expected between $400 million and $450 million. This breadth of upward revisions across revenue, billings, margin and earnings metrics signals management's confidence that current demand trends are structural rather than a one-quarter pop.

SASE Firewall Convergence Driving the CycleThe core fundamental thesis rests on Fortinet's "SASE Firewall" positioning — the convergence of firewall, SD-WAN and SASE functionality on a single FortiOS operating system powered by purpose-built FortiASIC silicon. This architecture lets customers deploy consistent security policy on-premises, at the edge, or in the cloud without stitching together multiple vendors. That convergence was extended in late July with the launch of the FortiGate 1200G series paired with FortiSASE Outpost, which delivers up to 397 Gbps of firewall throughput and brings cloud-delivered SASE services into customer-controlled environments, targeting the sovereignty, latency and compliance needs of AI-era, encrypted-traffic workloads. Fortinet was also recognized as a Challenger in the 2026 Gartner Magic Quadrant for SASE Platforms, reinforcing its expanding footprint in that category.

AI Woven Into the Security FabricArtificial intelligence is increasingly central to Fortinet's product roadmap and go-to-market motion. FortiOS 8.0, introduced at Fortinet Accelerate 2026, added Secure AI Controls for shadow-AI visibility and fabric-based AI agents. In June, the company launched FortiSOC, a cloud-delivered security operations platform that embeds agentic AI to autonomously investigate and correlate alerts and recommend or execute response actions under analyst oversight. In mid-July, Fortinet expanded FortiEndpoint with new AI-era capabilities, consolidating AI visibility and governance, endpoint detection and response, and data security into one agent, console and license, with availability expected in the third quarter. On the infrastructure side, Fortinet deepened integration with NVIDIA to accelerate its FortiAIGate solution, protecting AI workloads, data and autonomous agents across data centers and cloud environments. Management has also credited internal AI initiatives with contributing to record non-GAAP operating margin, pointing to an efficiency tailwind alongside the revenue opportunity.

Silicon Roadmap Strengthens the MoatIn late July, Fortinet announced a strategic collaboration with Intel to develop its next-generation Fortinet Security Processor 6, combining Fortinet's purpose-built ASIC expertise with Intel's advanced design, packaging and manufacturing capabilities. This is expected to advance Fortinet's long-term ASIC roadmap while strengthening supply chain resilience and geographic diversification — a fundamental input into the performance and cost advantages that differentiate FortiGate appliances from software-only competitors.

Valuation and Competitive LandscapeFrom a valuation standpoint, FTNT appears overvalued, trading at a forward 12-month price-to-earnings ratio of 44.39, higher than the sector's average of 21.53. The company carries a Value Score of F, though the premium is justified by Fortinet's superior margin profile, raised guidance trajectory and expanding AI- and SASE-driven total addressable market.

FTNT’s Valuation
Image Source: Zacks Investment Research

Competitively, Fortinet operates alongside Palo Alto Networks (PANW - Free Report) , Qualys (QLYS - Free Report) and Cisco (CSCO - Free Report) . Palo Alto Networks remains the largest platform rival, competing directly in firewall and SASE; Cisco leverages its networking incumbency to bundle security, competing with Fortinet's converged approach; and Qualys, more focused on vulnerability and exposure management, overlaps with Fortinet's broader security operations ambitions. Against Palo Alto Networks, Cisco and Qualys, Fortinet's ASIC-driven cost structure remains a differentiator.

ConclusionFortinet's raised 2026 guidance reflects genuine fundamental momentum — a firewall refresh cycle, expanding SASE convergence, deepening AI integration across SecOps and endpoint products and a strengthening silicon supply chain via Intel. While valuation is undeniably rich, the depth and breadth of Fortinet's product-led growth drivers support a constructive near-term stance on the stock. Fortinet currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 

Exceeds high end of second quarter guidance on revenue and profitability
Raises 2026 revenue guidance to 19% year over year growth

Highlights

Revenue grew 26% year over year to $2.05 billion Product revenue grew 52% year over year to $773 millionBillings grew 33% year over year to $2.37 billion1GAAP operating margin of 34%Non-GAAP operating margin of 38%1GAAP earnings per share grew 44% year over year to $0.82Non-GAAP earnings per share grew 41% year over year to $0.901Operating cash flow of $1.04 billionFree cash flow of $966 million1 SUNNYVALE, Calif., July 29, 2026 (GLOBE NEWSWIRE) -- Fortinet® (Nasdaq: FTNT), a global cybersecurity leader driving the convergence of networking and security, today announced financial results for the second quarter ended June 30, 2026.

“We are very pleased with our excellent second quarter results, which reflect the differentiated value of our innovation in the AI Era,” said Ken Xie, Founder, Chairman and Chief Executive Officer of Fortinet. “Our results reflect that customers value Fortinet’s unique ‘SASE Firewall’, with leading firewall, SD-WAN and SASE functionality integrated together on our single FortiOS operating system and powered by our purpose-built FortiASIC, offering customers flexible deployment in a sovereign form factor, on-prem and in the cloud.”

Recent Business Highlights

Announced a strategic collaboration with Intel to develop Fortinet Security Processor 6 (SP6), combining Fortinet’s proprietary, purpose-built security processor expertise with Intel’s advanced design, development, packaging, and manufacturing capabilities to accelerate SP6 development while strengthening the resilience and diversity of Fortinet’s global supply chain.Launched the FortiGate 1200G series with FortiSASE Outpost, combining local enforcement and cloud-delivered security to address customers’ evolving sovereignty, performance, and AI infrastructure requirements. The convergence of firewall and SASE technologies creates a new “SASE Firewall” market built for the realities of today’s hybrid world.Launched FortiSOC, a new cloud-delivered SOC platform that brings together six core security operations functions into a single AI SOC experience designed to simplify and scale modern security operations.Expanded FortiEndpoint converging multiple endpoint security innovations into one agent to help security teams safely enable AI adoption, strengthen data security, improve risk visibility, and simplify operations.Partnered with Anthropic on Project Glasswing (Mythos), OpenAI on Project Daybreak (GPT 5.5 Cyber), and NVIDIA as a founding member of its recently announced Open Secure AI Alliance for AI Safety and Security.Moody’s Ratings upgraded Fortinet’s senior unsecured notes rating to A3 from Baa1 and its senior unsecured shelf rating to (P)A3 from (P)Baa1, the highest rating of any public cybersecurity company. Guidance

For the third quarter of 2026, Fortinet currently expects:

Revenue in the range of $2.010 billion to $2.100 billionBillings in the range of $2.250 billion to $2.350 billionNon-GAAP gross margin in the range of 79.0% to 81.0%Non-GAAP operating margin in the range of 35.0% to 37.0%Diluted non-GAAP net income per share in the range of $0.83 to $0.87, assuming a non-GAAP effective tax rate of 18%. This assumes a diluted share count of 741 million to 745 million. For the fiscal year 2026, Fortinet currently expects:

Revenue in the range of $8.020 billion to $8.180 billionService revenue in the range of $5.180 billion to $5.220 billionBillings in the range of $9.350 billion to $9.550 billionNon-GAAP gross margin in the range of 79.0% to 81.0%Non-GAAP operating margin in the range of 35.0% to 37.0%Diluted non-GAAP net income per share in the range of $3.41 to $3.47, assuming a non-GAAP effective tax rate of 18%. This assumes a diluted share count of 741 million to 745 million. These statements are forward looking and actual results may differ materially. Refer to the Forward-Looking Statements section below for information on the factors that could cause our actual results to differ materially from these forward-looking statements.

Our guidance with respect to non-GAAP financial measures excludes stock-based compensation, amortization of acquired intangible assets, gain on intellectual property matters and a tax adjustment required for an effective tax rate on a non-GAAP basis, which differs from the GAAP effective tax rate. We have not reconciled our guidance with respect to non-GAAP financial measures to the corresponding GAAP measures because certain items that impact these measures are uncertain or out of our control or cannot be reasonably predicted. Accordingly, a reconciliation of these non-GAAP financial measures to the corresponding GAAP measures is not available without unreasonable effort.

Conference Call Details

Fortinet will host a conference call today at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to discuss the earnings results. A live webcast of the conference call and supplemental slides will be accessible from the Investor Relations page of Fortinet’s website at https://investor.fortinet.com and a replay will be archived and accessible at https://investor.fortinet.com/events-and-presentations.

Third Quarter 2026 Conference Participation Schedule:

Rosenblatt Technology Summit: The Age of AI
August 17, 2026 Stifel Tech Executive Summit
August 24, 2026 Deutsche Bank Technology Conference
August 27, 2026 Goldman Sachs Communacopia + Technology Conference
September 8, 2026 Kepler Cheuvreux Autumn Conference
September 10, 2026 Members of Fortinet’s management team are expected to present at these conferences and discuss the latest company strategies and initiatives. Fortinet’s conference presentations are expected to be available via webcast on the company’s website. To access the most updated information, pre-register and listen to the webcast of each event, please visit the Investor Presentation & Events page of Fortinet’s website at https://investor.fortinet.com/events-and-presentations. The schedule is subject to change.

About Fortinet (www.fortinet.com)

Fortinet (Nasdaq: FTNT) is a driving force in the evolution of cybersecurity and the convergence of networking and security. Our mission is to secure people, devices and data everywhere, and today we deliver cybersecurity everywhere our customers need it with the largest integrated portfolio of over 50 enterprise-grade products. Well over half a million customers trust Fortinet’s solutions, which are among the most deployed, most patented and most validated in the industry. The Fortinet Training Institute, one of the largest and broadest training programs in the industry, is dedicated to making cybersecurity training and new career opportunities available to everyone. Collaboration with esteemed organizations from both the public and private sectors, including Computer Emergency Response Teams (“CERTs”), government entities, and academia, is a fundamental aspect of Fortinet’s commitment to enhance cyber resilience globally. FortiGuard Labs, Fortinet’s elite threat intelligence and research organization, develops and utilizes leading-edge machine learning and AI technologies to provide customers with timely and consistently top-rated protection and actionable threat intelligence. Learn more at https://www.fortinet.com, the Fortinet Blog or FortiGuard Labs.

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding any indications related to future growth and market share gains, our strategy going forward, and guidance and expectations around future financial results, including guidance and expectations for the third quarter and full year 2026, and any statements regarding our market opportunity and market size, and business momentum. Although we attempt to be accurate in making forward-looking statements, it is possible that future circumstances might differ from the assumptions on which such statements are based such that actual results are materially different from our forward-looking statements in this release. Important factors that could cause results to differ materially from the statements herein include the following: general economic risks, including those caused by economic challenges, a possible economic downturn or recession and the effects of inflation or stagflation, changing interest rates or reduced information technology spending; supply chain challenges; negative impacts from global conflicts and their related macroeconomic effects; competitiveness in the security market; the dynamic nature of the security market and its products and services; specific economic risks worldwide and in different geographies, and among different customer segments; uncertainty regarding demand and increased business and renewals from existing customers; sales execution risks, including risks in connection with the timing and completion of large strategic deals; uncertainties around continued success in sales growth and market share gains; uncertainties in market opportunities and the market size; actual or perceived vulnerabilities in our supply chain, products or services, and any actual or perceived breach of our network or our customers’ networks; longer sales cycles, particularly for larger enterprise, service providers, government and other large organization customers; the effectiveness of our salesforce and failure to convert sales pipeline into final sales; risks associated with successful implementation of multiple integrated software products and other product functionality risks; risks associated with integrating acquisitions and changes in circumstances and plans associated therewith, including, among other risks, changes in plans related to product and services integrations, product and services plans and sales strategies; sales and marketing execution risks; execution risks around new product development and introductions and innovation; litigation and disputes and the potential cost, distraction and damage to sales and reputation caused thereby or by other factors; cybersecurity threats, breaches and other disruptions; market acceptance of new products and services; the ability to attract and retain personnel; changes in strategy; risks associated with management of growth; lengthy sales and implementation cycles, particularly in larger organizations; technological changes that make our products and services less competitive, including advances in artificial intelligence; risks associated with the adoption of, and demand for, our products and services in general and by specific customer segments, including those caused by competition and pricing pressure; excess product inventory for any reason, including those caused by the effects of inflation and changing interest rates in certain geographies and the war in Ukraine, tensions between China and Taiwan or conflicts in the Middle East; risks associated with business disruption caused by natural disasters and health emergencies such as earthquakes, fires, power outages, typhoons, floods, health epidemics and viruses, and by manmade events such as civil unrest, labor disruption, international trade disputes, international conflicts such as the war in Ukraine, tensions between China and Taiwan or conflicts in the Middle East, terrorism, wars, and critical infrastructure attacks; tariffs, trade disputes and other trade barriers, and negative impact on sales based on geo-political dynamics and disputes and protectionist policies, including the impact of any future shutdowns of the U.S. government; and the other risk factors set forth from time to time in our most recent Annual Report on Form 10-K, our most recent Quarterly Report on Form 10-Q and our other filings with the Securities and Exchange Commission (“SEC”), copies of which are available free of charge at the SEC’s website at www.sec.gov or upon request from our investor relations department. All forward-looking statements herein reflect our opinions only as of the date of this release, and we undertake no obligation, and expressly disclaim any obligation, to update forward-looking statements herein in light of new information or future events.

Use of Non-GAAP Financial Measures

We believe that the presentation of non-GAAP financial information provides important supplemental information to management and investors regarding financial and business trends relating to our financial condition and results of operations. For further information regarding why we believe that these non-GAAP measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to the “Explanation of Non-GAAP Financial Measures” section of this press release.

FORTINET, INC.
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (Unaudited, in millions)
  June 30,
2026 December 31,
2025ASSETS   CURRENT ASSETS:   Cash and cash equivalents$2,934.9  $2,495.3 Short-term investments 1,134.7   1,087.2 Accounts receivable—net 1,455.6   1,691.2 Inventory 426.3   399.5 Prepaid expenses and other current assets 256.8   227.0 Total current assets 6,208.3   5,900.2 LONG-TERM INVESTMENTS 399.1   339.7 PROPERTY AND EQUIPMENT—NET 1,699.5   1,619.0 DEFERRED CONTRACT COSTS 785.1   735.5 DEFERRED TAX ASSETS 1,319.4   1,314.9 GOODWILL AND OTHER INTANGIBLE ASSETS—NET 334.5   354.7 OTHER ASSETS 113.3   125.2 TOTAL ASSETS$10,859.2  $10,389.2 LIABILITIES AND STOCKHOLDERS’ EQUITY   CURRENT LIABILITIES:   Accounts payable$282.5  $230.8 Accrued liabilities 393.7   354.6 Accrued payroll and compensation 322.8   312.9 Current portion of long-term debt —   499.7 Deferred revenue 3,841.8   3,636.0 Total current liabilities 4,840.8   5,034.0 DEFERRED REVENUE 3,833.9   3,479.8 LONG-TERM DEBT 496.9   496.6 OTHER LIABILITIES 136.5   141.3 Total liabilities 9,308.1   9,151.7 COMMITMENTS AND CONTINGENCIES   STOCKHOLDERS’ EQUITY:   Common stock 0.7   0.7 Additional paid-in capital 1,895.9   1,770.1 Accumulated other comprehensive loss (28.8)  (25.4)Accumulated deficit (316.7)  (507.9)Total stockholders’ equity 1,551.1   1,237.5 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$10,859.2  $10,389.2          FORTINET, INC.
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited, in millions, except per share amounts)
  Three Months Ended Six Months Ended June 30,
2026 June 30,
2025 June 30,
2026 June 30,
2025REVENUE:       Product$773.0  $508.9  $1,418.1  $968.0 Service 1,274.9   1,121.1   2,479.4   2,201.7 Total revenue 2,047.9   1,630.0   3,897.5   3,169.7 COST OF REVENUE:       Product 233.8   165.9   442.1   315.8 Service 170.9   149.0   327.1   292.2 Total cost of revenue 404.7   314.9   769.2   608.0 GROSS PROFIT:       Product 539.2   343.0   976.0   652.2 Service 1,104.0   972.1   2,152.3   1,909.5 Total gross profit 1,643.2   1,315.1   3,128.3   2,561.7 OPERATING EXPENSES:       Research and development 225.0   209.5   439.0   408.1 Sales and marketing 669.1   592.0   1,305.4   1,134.7 General and administrative 61.1   56.9   117.3   114.7 Gain on intellectual property matters (1.3)  (1.3)  (2.7)  (7.6)Total operating expenses 953.9   857.1   1,859.0   1,649.9 OPERATING INCOME 689.3   458.0   1,269.3   911.8 INTEREST INCOME 33.2   45.0   66.1   89.3 INTEREST EXPENSE (3.2)  (4.6)  (7.4)  (9.5)OTHER INCOME—NET 0.9   18.9   48.8   45.0 INCOME BEFORE INCOME TAXES AND GAIN (LOSS) FROM EQUITY METHOD INVESTMENTS 720.2   517.3   1,376.8   1,036.6 PROVISION FOR INCOME TAXES 115.0   77.1   237.0   173.6 GAIN (LOSS) FROM EQUITY METHOD INVESTMENTS 1.1   (0.1)  1.0   10.5 NET INCOME$606.3  $440.1  $1,140.8  $873.5 Net income per share:       Basic$0.83  $0.57  $1.55  $1.14 Diluted$0.82  $0.57  $1.54  $1.13 Weighted-average shares outstanding:       Basic 733.1   765.5   735.9   766.9 Diluted 739.9   772.7   741.3   774.8                  FORTINET, INC.
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in millions)
  Six Months Ended June 30,
2026 June 30,
2025CASH FLOWS FROM OPERATING ACTIVITIES:   Net income$1,140.8  $873.5 Adjustments to reconcile net income to net cash provided by operating activities:   Stock-based compensation 151.8   135.2 Amortization of deferred contract costs 190.9   160.0 Depreciation and amortization 81.2   74.1 Amortization of investment discounts (9.3)  (19.4)Other (47.7)  (44.8)Changes in operating assets and liabilities, net of impact of business combinations:   Accounts receivable—net 235.1   262.7 Inventory (38.0)  (79.6)Prepaid expenses and other current assets (0.5)  (32.1)Deferred contract costs (240.5)  (202.5)Deferred tax assets (3.6)  (75.3)Other assets (9.0)  (11.7)Accounts payable 49.7   46.8 Accrued liabilities 54.5   (9.7)Accrued payroll and compensation 10.0   22.9 Deferred revenue 559.9   204.8 Other liabilities (4.6)  10.3 Net cash provided by operating activities 2,120.7   1,315.2 CASH FLOWS FROM INVESTING ACTIVITIES:   Purchases of investments (756.0)  (976.5)Sales of investments 118.4   5.7 Maturities of investments 587.5   869.6 Purchases of property and equipment (148.6)  (234.3)Payments made in connection with business combinations, net of cash acquired —   (41.6)Other 8.4   0.1 Net cash used in investing activities (190.3)  (377.0)CASH FLOWS FROM FINANCING ACTIVITIES:   Repurchase and retirement of common stock (972.8)  (401.1)Repayment of senior notes (500.0)  — Proceeds from issuance of common stock 62.3   31.3 Taxes paid related to net share settlement of equity awards (59.1)  (77.0)Other (21.2)  (0.1)Net cash used in financing activities (1,490.8)  (446.9)EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS —   1.3 NET INCREASE IN CASH AND CASH EQUIVALENTS 439.6   492.6 CASH AND CASH EQUIVALENTS—Beginning of period 2,495.3   2,875.9 CASH AND CASH EQUIVALENTS—End of period$2,934.9  $3,368.5          Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures
(Unaudited, in millions, except per share amounts)
 Reconciliation of GAAP to non-GAAP gross profit, gross margin, operating income, operating margin, net income and diluted net income per share
  Three Months Ended June 30,
2026 June 30,
2025Revenue$2,047.9  $1,630.0     Reconciliation of non-GAAP gross profit:   GAAP gross profit$1,643.2  $1,315.1 GAAP gross margin 80.2%  80.7%Add back:   Stock‐based compensation 8.7   7.5 Amortization of acquired intangible assets 5.8   7.3 Non‐GAAP gross profit$1,657.7  $1,329.9 Non‐GAAP gross margin 80.9%  81.6%    Reconciliation of non-GAAP operating income:   GAAP operating income$689.3  $458.0 GAAP operating margin 33.7%  28.1%Add back:   Stock‐based compensation 80.8   69.9 Amortization of acquired intangible assets 9.9   13.2 Gain on intellectual property matters (1.3)  (1.3)Non‐GAAP operating income$778.7  $539.8 Non‐GAAP operating margin 38.0%  33.1%    Reconciliation of non-GAAP net income:   GAAP net income$606.3  $440.1 Add back:   Stock‐based compensation 80.8   69.9 Amortization of acquired intangible assets 9.9   13.2 Gain on intellectual property matters (1.3)  (1.3)Tax adjustment(a) (30.7)  (30.8)Non-GAAP net income$665.0  $491.1     Reconciliation of non-GAAP net income per share, diluted   GAAP net income per share, diluted$0.82  $0.57 Add back:   Non-GAAP adjustments to net income per share 0.08   0.07 Non-GAAP net income per share, diluted$0.90  $0.64     Shares used in diluted net income per share calculations 739.9   772.7          (a) Non-GAAP financial information is adjusted to an effective tax rate of 18% in each period for the three months ended June 30, 2026 and 2025, on a non-GAAP basis, which differs from the GAAP effective tax rate.

Reconciliation of net cash provided by operating activities to adjusted free cash flow

 Three Months Ended June 30,
2026 June 30,
2025Net cash provided by operating activities$1,043.6  $451.9 Less: Purchases of property and equipment (78.0)  (167.8)Free cash flow$965.6  $284.1 Add: Real estate related purchases 30.3   143.8 Adjusted free cash flow$995.9  $427.9 Free cash flow margin 47.2%  17.4%Adjusted free cash flow margin 48.6%  26.3%Net cash used in investing activities$(184.6) $(266.2)Net cash used in financing activities$(147.9) $(414.2)         Reconciliation of total revenue to total billings

 Three Months Ended June 30,
2026 June 30,
2025Total revenue$2,047.9 $1,630.0 Add: Change in deferred revenue 324.2  149.2 Less: Deferred revenue balance acquired in business acquisitions —  (0.8)Total billings$2,372.1 $1,778.4         1 A reconciliation of GAAP to non-GAAP measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading “Explanation of Non-GAAP Financial Measures”.

Explanation of Non-GAAP Financial Measures

We have provided in this release financial information that has not been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). These non-GAAP financial and liquidity measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies. We use these non-GAAP financial measures internally in analyzing our financial results and believe they are useful to investors, as a supplement to GAAP measures, in evaluating our ongoing operational performance. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial results with peer companies, many of which present similar non-GAAP financial measures to investors.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures provided in the financial statement tables below.

Billings (non-GAAP). We define billings as revenue recognized in accordance with GAAP plus the change in deferred revenue from the beginning to the end of the period less any deferred revenue balances acquired from business combination(s) during the period. We consider billings to be a useful metric for management and investors because billings drive current and future revenue as well as cash flows. There are a number of limitations related to the use of billings instead of GAAP revenue. First, billings are impacted by the term of security subscription and support agreements and do not provide an indication as to the timing of revenue being recognized from these service contracts. Second, we may calculate billings in a manner that is different from peer companies that report similar financial measures. Management accounts for these limitations by providing specific information regarding GAAP revenue and evaluating billings together with GAAP revenue.

Free cash flow (non-GAAP). We define free cash flow as net cash provided by operating activities minus purchases of property and equipment. Free cash flow margin is defined as free cash flow divided by GAAP revenue. We believe free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after capital expenditures, can be used for strategic opportunities, including repurchasing outstanding common stock, investing in our business, making strategic acquisitions and strengthening the balance sheet. A limitation of using free cash flow rather than the GAAP measures of cash provided by or used in operating activities, investing activities, and financing activities is that free cash flow does not represent the total increase or decrease in the cash and cash equivalents balance for the period because it excludes investing activities other than capital expenditures and cash flows from financing activities. Management accounts for this limitation by providing information about our capital expenditures and other investing and financing activities on the face of the cash flow statement and under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” in our most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K and by presenting cash flows from investing and financing activities in our reconciliation of free cash flow. In addition, it is important to note that other companies, including companies in our industry, may not use free cash flow, may calculate free cash flow in a different manner than we do or may use other financial measures to evaluate their performance, all of which could reduce the usefulness of free cash flow as a comparative measure.

Adjusted free cash flow (non-GAAP). We define adjusted free cash flow as free cash flow plus cash payments associated with real estate related purchases. Adjusted free cash flow margin is defined as adjusted free cash flow divided by GAAP revenue.

Non-GAAP gross profit and gross margin. We define non-GAAP gross profit as gross profit plus stock-based compensation and amortization of acquired intangible assets. Non-GAAP gross margin is defined as non-GAAP gross profit divided by GAAP revenue.

Non-GAAP operating income and operating margin. We define non-GAAP operating income as operating income plus stock-based compensation and amortization of acquired intangible assets, less gain on intellectual property matters and, when applicable, other significant non-recurring items in a given quarter. Non-GAAP operating margin is defined as non-GAAP operating income divided by GAAP revenue.

We consider these non-GAAP financial measures to be useful metrics for management and investors because they exclude the items noted above so that our management and investors can compare our recurring core business gross profit, gross margin and operating results over multiple periods. There are a number of limitations related to the use of non-GAAP financial measurements instead of the measurements calculated in accordance with GAAP. First, these non-GAAP financial measures exclude the items noted above. Second, the components of the costs and gains that we exclude from our calculation of non-GAAP measures may differ from the components that peer companies exclude when they report their non-GAAP results of operations. Management accounts for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP financial measures and evaluating non-GAAP operating income together with these measures calculated in accordance with GAAP.

Non-GAAP net income and diluted net income per share. We define non-GAAP net income as net income plus the items noted above under non-GAAP operating income and operating margin. In addition, we adjust non-GAAP net income and diluted net income per share for a tax adjustment required for an effective tax rate on a non-GAAP basis, which differs from the GAAP effective tax rate. We define non-GAAP diluted net income per share as non-GAAP net income divided by the non-GAAP diluted weighted-average shares outstanding. We consider these non-GAAP financial measures to be useful metrics for management and investors for the same reasons that we use non-GAAP operating income and non-GAAP operating margin. However, in order to provide a more complete picture of our recurring core business operating results, we include in non-GAAP net income and non-GAAP diluted net income per share, the tax adjustment required resulting in an effective tax rate on a non-GAAP basis, which often differs from the GAAP tax rate. We believe the non-GAAP effective tax rates we use are reasonable estimates of normalized tax rates for our current and prior fiscal years under our global operating structure. The same limitations described above regarding our use of non-GAAP operating income and non-GAAP operating margin apply to our use of non-GAAP net income and non-GAAP diluted net income per share. We account for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP net income and non-GAAP diluted net income per share and evaluating non-GAAP net income and non-GAAP diluted net income per share together with net income and diluted net income per share calculated in accordance with GAAP.

Copyright © 2026 Fortinet, Inc. All rights reserved. The symbols ® and ™ denote respectively federally registered trademarks and common law trademarks of Fortinet, Inc., its subsidiaries and affiliates. Fortinet’s trademarks include, but are not limited to, the following: Fortinet, the Fortinet logo, FortiGate, FortiOS, FortiGuard, FortiCare, FortiAnalyzer, FortiManager, FortiASIC, FortiClient, FortiCloud, FortiCore, FortiMail, FortiSandbox, FortiADC, FortiAgent, FortiAI, FortiAIGate, FortiAIOps, FortiAntenna, FortiAP, FortiAPCam, FortiAppSec, FortiAuthenticator, FortiBranchSASE, FortiCall, FortiCam, FortiCamera, FortiCarrier, FortiCART, FortiCASB, FortiCentral, FortiConnect, FortiController, FortiConverter, FortiDAST, FortiDATA, FortiDB, FortiDevice, FortiDDoS, FortiDeceptor, FortiDeploy, FortiDevice, FortiDevSec, FortiDLP, FortiEdge, FortiEDR, FortiEndpoint, FortiExplorer, FortiExtender, FortiFirewall, FortiFlex, FortiFone, FortiGSLB, FortiGuest, FortiHSM, FortiHypervisor, FortiIdentity, FortiInsight, FortiIsolator, FortiLink, FortiMonitor, FortiNAC, FortiNDR, FortiPAM, FortiPhish, FortiPoint, FortiPoints, FortiPortal, FortiPresence, FortiProxy, FortiRecon, FortiRecorder, FortiSASE, FortiSAT, FortiSEC, FortiSIEM, FortiSMS, FortiSOAR, FortiSOC, FortiSRA, FortiSwitch, FortiTelemetry, FortiTester, FortiTIP, FortiToken, FortiTrust, FortiVoice, FortiWAN, FortiWeb, FortiWiFi, FortiWLC, FortiWLM, FortiXDR, Lacework FortiCNAPP, Linksys, the Linksys logo, Linksys Cognitive, Intelligent Mesh, Velop, Max-Stream, WRT and SECURITY FABRIC. Other trademarks belong to their respective owners. Fortinet has not independently verified statements or certifications herein attributed to third parties and Fortinet does not independently endorse such statements. Notwithstanding anything to the contrary herein, nothing herein constitutes a warranty, guarantee, contract, binding specification or other binding commitment by Fortinet or any indication of intent related to a binding commitment, and performance and other specification information herein may be unique to certain environments.

FTNT-F

Investor Contact: Media Contact:   Anthony Luscri Stephanie LiraFortinet, Inc. Fortinet, Inc.408-235-7700 [email protected] [email protected]

Fortinet (NASDAQ:FTNT | FTNT Price Prediction) heads into Wednesday’s Q2 earnings report with a record few cybersecurity companies can match: 24th consecutive quarter without an earnings miss. The business is generating record free cash flow, and is running a buyback program large enough to function as a de facto dividend. Here are 3 reasons this cybersecurity giant looks appealing ahead of earnings:

Product Revenue Just Accelerated 41% Fortinet’s Product revenue reaccelerated to +41% YoY in Q1, and billings jumped 31%, signaling the firewall refresh cycle around FortiOS 8.0 and the FortiGate G Series is live.

In addition, management raised FY26 guidance to $7.71B–$7.87B revenue and $3.10–$3.16 in non-GAAP EPS. The company’s Q1 earnings report drove a +28.17% 30-day move against the S&P 500’s +0.75%, which demonstrates how a strong report on Wednesday could elicit a meaningful market reaction.

Fortinet’s $10.25 Billion Share Buyback In Q1 alone, Fortinet repurchased $823 million of stock. These purchases have proven to be well timed, as the stock has since raced forward, and they show the business’s capability to return capital to shareholders.

Today, the company sits on a $10.25 billion total share repurchase authorization after a $1.0 billion board raise, and produced record free cash flow of $1.006 billion (+26.32% YoY) to fund it. The company’s net debt to EBITDA sits at -0.67, so the balance sheet has ample room to fund the buybacks directly.

Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Fortinet didn't make the cut. Grab the names FREE today.

Fortinet’s Valuation Looks Reasonable Compared to Palo Alto Cybersecurity companies are known for trading at high multiples, but Fortinet looks reasonably valued compared to peers. The stock trades at a forward P/E of 52x against a business compounding at roughly 15% YoY revenue growth with a 31.3% operating margin and a 27.5% net margin. A competitor, Palo Alto Networks (NASDAQ:PANW), trades at a forward P/E of 78x with a TTM operating margin of -2.47%.

Strong Execution Is Offsetting Supply-Chain Pressure The bear case is valuation and lingering supply-chain risk. Both were the exact concerns cited by the last analyst downgrade, and both were answered in the same quarter Fortinet posted 41% product revenue growth and $1.01 billion of free cash flow. CEO Ken Xie framed it directly, noting the company’s “direct operations, manufacturing model and strong execution turn supply chain challenges into opportunities to gain market share.”

If the firewall refresh cycle continues, Fortinet can use its growing cash flow and $10.25 billion authorization to repurchase more shares. That combination gives long-term investors two potential return drivers: continued business growth and a steadily declining share count.

Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Fortinet didn't make the cut. Grab the names FREE today.

Contact [email protected] for any questions or corrections.

Fortinet Inc (NASDAQ:FTNT) is set to report its second quarter results on July 29, with Jefferies analysts highlighting that the company needs to show an acceleration in product revenue growth to support investor confidence in the durability of its recent performance.

The firm expects solid product trends in the quarter, driven by price increases and improving channel checks, but wrote that investors will be looking for evidence the momentum can extend beyond the near term.

Jefferies expects product revenue growth to strengthen from the first quarter as Fortinet benefits from a full quarter of higher pricing and what it described as improving demand trends. The firm's proprietary survey showed performance versus plan improved sequentially, while channel checks pointed to healthy firewall demand despite some inventory constraints and longer appliance lead times.

The firm wrote that while product strength could continue for another quarter or two, it needs greater confidence that growth can be sustained into 2027 and that services billings, particularly subscriptions, will remain strong before becoming more constructive on the stock.

Billings will also be closely watched. Jefferies expects Fortinet to exceed its second-quarter billings guidance, which calls for 20% year-over-year growth at the midpoint, but does not expect management to significantly raise its full-year billings outlook given tougher comparisons in the second half of the year and longer lead times for appliances.

Margins are another focus. Jefferies expects Fortinet's midpoint guidance for a 34% non-GAAP operating margin to be achievable, supported by recent price increases and lower-cost inventory. However, it wrote that investors are likely to monitor the impact of rising memory costs and longer procurement cycles on margins later this year.

Jefferies' latest survey showed Fortinet's average performance versus plan improved to 2.3% above plan in the second quarter from 0.5% below plan in the first quarter, outperforming the average across cybersecurity vendors covered in the survey. The firm also wrote that investors will be looking for further signs of momentum in Fortinet's secure access service edge (SASE) business as the company continues to expand its bundled offerings.

Shares of Fortinet are up about 90% so far this year, trading hands at $151 on Thursday.

While Intel continues to pursue a marquee customer for its foundry services, the chipmaker has landed a notable client from the cybersecurity space.

Fortinet will use Intel's foundry to produce its next-generation security chip, the two companies announced Tuesday, marking a win for Intel CEO Lip-Bu Tan, who took over the company in March 2025. Fortinet's chip, SP6, will be manufactured on the Intel 4 process, an Intel representative told CNBC.

Intel said in a filing in April that it's still trying to secure a "significant" customer for the company's most advanced manufacturing technology, as it tries to justify the large capital expenditures needed to build factories in the U.S. and overseas.

The company's leading processes designed to manufacture computer processors are known as 14A and 18A. Intel 4 is older manufacturing technology that's less advanced and was established for simpler chips called ASICs for networking.

Tan told CNBC's Jim Cramer in May that "multiple customers" were working with Intel's foundry, but he also said that it's his personal policy not to disclose their names. A major customer announcement would increase confidence among chip designers and investors that Intel is capable of building the most advanced chips in large quantities.

So far, Intel's biggest confirmed customer for its foundry is itself. The U.S. government is also using the foundry to make chips for defense. Under Pat Gelsinger, Intel's previous CEO, Microsoft announced a partnership with the chipmaker to manufacture an unspecified processor in 2024, and Amazon said later that year it would use Intel to build a custom artificial intelligence chip, but those announcements were for relatively low-volume chips.

In April, Intel said it would help design an ASIC with Google that it calls an infrastructure processing unit. Intel is also helping Elon Musk's Tesla and SpaceX build a chip factory called Terafab. And President Donald Trump said in June that Apple would use Intel to manufacture chips in the U.S., but neither company has officially confirmed a deal. The U.S. government took a 10% stake in Intel in August, sparking a rally that's lifted the chipmaker's stock price by more than 300% in the past year.

Intel is scheduled to report second-quarter results on Thursday after the bell.

Fortinet doesn't have the name recognition of Apple, Tesla or any of the hyperscalers, but it's operating in a hot market due to the heightened demand for advanced security in a world increasingly dominated by AI. Fortinet's stock price has more than doubled this year, and the company said on its last earnings call in May that it would keep in investing in its ASIC technology.

watch now

Key Takeaways Fortinet expanded FortiGate with new G Series models and launched the FortiSOC cloud SOC platform.FTNT posted 20% Q1 revenue growth, record free cash flow and raised full-year 2026 guidance.Fortinet balances FortiGate hardware growth with FortiSOC expansion amid rollout and adoption challenges. Fortinet's (FTNT - Free Report) push to expand its FortiGate hardware lineup and cloud-delivered security operations platform is reigniting investor attention on the cybersecurity firm's growth runway. The company recently widened its FortiGate G Series with the 3500G and 400G models, built on its proprietary NP7 and SP5 processors and running FortiOS 8.0, the operating system introduced in March 2026 with AI-driven security, SASE and quantum-safe capabilities.

The FortiGate 3500G targets high-density data centers, delivering 595 Gbps of firewall throughput and support for 179 million concurrent sessions, while consuming just 1.6 watts per Gbps of throughput. The FortiGate 400G, aimed at enterprise edges, offers 164 Gbps of firewall throughput and 28 million concurrent sessions. On the cloud side, Fortinet in June 2026 launched FortiSOC, a unified, cloud-delivered security operations platform that consolidates six SOC functions into a single SaaS experience with embedded agentic AI for alert investigation and response.

These product moves followed a strong first quarter. Revenues grew 20% year over year to $1.85 billion, with product revenues increasing 41% to $645 million and billings rising 31% to $2.09 billion. GAAP operating margin came in at 31%, non-GAAP operating margin at 36%, and non-GAAP EPS rose 41% to 82 cents, alongside record free cash flow of $1.01 billion. Management raised full-year 2026 revenue guidance to roughly 15% year-over-year growth, with full-year revenues now expected between $7.71 billion and $7.87 billion and non-GAAP operating margin guided to 33-36%.

The growth narrative isn't without friction. Product revenue strength reflects a hardware refresh cycle that can be lumpy, and the FortiSOC rollout currently spans only the U.S. and EMEA at launch, with broader regional expansion planned through 2026 — meaning near-term cloud contribution remains modest relative to the installed base. FortiSOC also layers onto, rather than replaces, existing tools like FortiAnalyzer and FortiSIEM, raising questions about how quickly customers migrate. Even so, the combination of differentiated ASIC-based hardware economics and an expanding SaaS security-operations footprint gives Fortinet two distinct growth levers heading into the back half of 2026, with execution against raised guidance the next test for the stock.

How Rivals Palo Alto Networks and Check Point CompareOn the same firewall-and-cloud-SOC theme, Palo Alto Networks (PANW - Free Report) and Check Point Software (CHKP - Free Report) offer contrasting benchmarks. Palo Alto Networks posted second-quarter fiscal 2026 revenues of $2.6 billion, up 15% year over year, with product revenues up 22%, while its Cortex XSIAM cloud SOC platform helped drive next-generation security ARR up 33% to $6.33 billion. Check Point, by contrast, reported first-quarter 2026 revenues of $668 million, up just 5%, with security subscriptions rising 11% to $323 million, as weaker firewall appliance revenues tied to go-to-market execution changes weighed on results. Against Palo Alto Networks' faster cloud-platform ARR growth and Check Point's appliance-driven softness, Fortinet's FortiGate hardware gains and FortiSOC launch position it between the two on execution.

FTNT’s Share Price Performance, Valuation & EstimatesFortinet shares have gained 88.5% in the past six-month period, outperforming the Zacks Security industry and the broader Computer and Technology sector’s growth of 48.4% and 11.6%, respectively.

FTNT’s 6-Month Price Performance
Image Source: Zacks Investment Research

From a valuation standpoint, FTNT appears overvalued, trading at a forward 12-month price-to-earnings ratio of 46.41, higher than the sector's average of 23.39. The company carries a Value Score of F.

FTNT’s Valuation
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for Fortinet’s earnings is pegged at $3.13 per share for 2026, which implies year-over-year growth of 13.41%.

Fortinet currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CompaniesWASHINGTON, June 17 (Reuters) - Researchers say a sweeping hacking campaign targeting ​devices made by Fortinet (FTNT.O), opens new tab has led to compromises across the internet, with evidence of password theft at ‌Fortune 500 companies and government agencies in more than 15 countries.

Most of the affected devices were in the United States, India, and Taiwan, according to Hudson Rock, a firm that tracks cybercrime. Hudson Rock described the scale of the spy campaign as "staggering."

The Reuters Daily Briefing newsletter provides all the news you need to start your day. Sign up here.

"The scale of this breach ​touches nearly every sector of the global economy, sparing no industry," it said in a blog post, opens new tab published on ​Wednesday. The firm said that some 75,000 Fortinet firewall and VPN devices - tools that companies ⁠use to protect their networks and allow employees to log in remotely - had been compromised, potentially allowing the hackers to ​penetrate deeper into these organizations and steal data.

In a statement, Fortinet said it was aware of a campaign to steal ​login credentials from its firewall and VPN devices.

The company said that hackers were drawing on data "from previous incidents" and guessing passwords repeatedly - a technique known as "bruteforcing" to break into target networks or devices.

Fortinet said the malicious cyber activity was "not related to any recent incident or advisory." The ​company did not immediately respond to questions about the scope of the campaign uncovered by researchers, and Reuters could not ​establish how many password thefts led to intrusions at the affected companies.

Officials at the U.S. cyber defense agency CISA, the FBI, and ‌the Office ⁠of the National Cyber Director did not immediately return emails. Cybersecurity officials in India and Taiwan did not immediately return emails.

Agencies in the states of Washington and Nevada whose credentials were captured in the data did not immediately respond to a request for comment. A staffer at one agency in South Carolina told Reuters they were unaware of the situation, ​while another employee said they would ​look into it before ⁠providing any additional information.

Nearly 120 distinct credentials across five government entities in Puerto Rico were among those swept up in the campaign, according to cybersecurity research firm Hudson Rock. A ​spokesperson for the Puerto Rico Police Department, which was included in the list, referred questions ​to the Puerto ⁠Rico Innovation and Technology Service. A spokesperson for the office did not immediately respond to a request for comment.

Bob Diachenko, a security researcher and owner of cybersecurity company Securitydiscovery.com, discovered the data in an open server as part of his normal monitoring ⁠work, he ​said in an interview.

"This is quite significant," he said, adding the ​campaign showed a "very creative approach to bruteforcing, with a multilayer password cracking architecture."

Diachenko said scripts discovered in the data included Russian-language instructions, suggesting the campaign ​may be the work of a Russian cybercrime group.

Reporting by Raphael Satter, Editing by Franklin Paul, Sanjeev Miglani and Lincoln Feast.

Our Standards: The Thomson Reuters Trust Principles., opens new tab

Reporter covering cybersecurity, surveillance, and disinformation for Reuters. Work has included investigations into state-sponsored espionage, deepfake-driven propaganda, and mercenary hacking.

Cybersecurity correspondent covering cybercrime, nation-state threats, hacks, leaks and intelligence