Fortinet (NASDAQ:FTNT) Announces Earnings Results, Beats Expectations By $0.05 EPS

Fortinet (NASDAQ:FTNT) issued its quarterly earnings data on Wednesday. The software maker reported $0.91 earnings per share (EPS) for the quarter, beating the consensus estimate of $0.86 by $0.05, FiscalAI reports. Fortinet had a return on equity of 182.65% and a net margin of 28.96%. The firm had revenue of $2.08 billion during the quarter, compared to the consensus estimate of $2.06 billion. During the same quarter in the previous year, the company posted $0.74 EPS. The business’s revenue for the quarter was up 20.5% compared to the same quarter last year.

Here are the key takeaways from Fortinet’s conference call:

• Strong third-quarter execution: Billings rose 29% to $2.34 billion, revenue increased 20% to $2.08 billion, and large enterprise deals over $1 million grew 51%. Fortinet raised its full-year billings and revenue guidance for the third time in 2026.
• Demand remains broad-based across AI security, SASE firewalls, network upgrades, and operational technology, with SASE Firewall billings up 31% and OT billings up nearly 40%. Management expects AI-related threats and infrastructure investments to support durable growth and continued market-share gains.
• Service revenue growth was 13%, constrained by delayed activations and ramp timing for large enterprise and expansion agreements, as well as product mix toward hardware-heavy sovereign and AI deployments. However, service billings grew 26%, total deferred revenue rose 19%, and management expects improved service-revenue growth in 2027.
• Profitability and cash generation were exceptionally strong, including a 38.2% non-GAAP operating margin, $0.91 non-GAAP EPS, and $865 million of free cash flow. The board also increased the stock-repurchase authorization by approximately $1.2 billion, leaving $2 billion available.
• Component lead times lengthened and costs continued to rise after the benefit from lower-cost inventory diminished, pressuring product gross margins despite higher pricing and favorable product mix. Management said pricing increases have slowed but costs have not yet improved.

Fortinet Price Performance

Shares of NASDAQ:FTNT traded down $3.37 on Friday, reaching $135.73. The company’s stock had a trading volume of 4,064,059 shares, compared to its average volume of 5,837,559. Fortinet has a 52-week low of $73.55 and a 52-week high of $197.13. The company has a debt-to-equity ratio of 0.32, a quick ratio of 1.19 and a current ratio of 1.28. The company has a market cap of $99.59 billion, a P/E ratio of 44.08, a PEG ratio of 3.25 and a beta of 1.03. The company has a 50-day simple moving average of $171.64 and a 200 day simple moving average of $127.99.

Insider Buying and Selling at Fortinet

In other Fortinet news, CEO Ken Xie sold 161,482 shares of Fortinet stock in a transaction on Monday, August 3rd. The shares were sold at an average price of $162.66, for a total transaction of $26,266,662.12. Following the sale, the chief executive officer owned 52,972,372 shares of the company’s stock, valued at $8,616,486,029.52. The trade was a 0.30% decrease in their position. The sale was disclosed in a document filed with the SEC, which is available through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, VP Michael Xie sold 3,121 shares of Fortinet stock in a transaction dated Monday, August 3rd. The shares were sold at an average price of $162.63, for a total value of $507,568.23. Following the completion of the transaction, the vice president directly owned 9,918,360 shares of the company’s stock, valued at approximately $1,613,022,886.80. This represents a 0.03% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Insiders have sold 221,303 shares of company stock worth $36,164,034 over the last quarter. Insiders own 17.60% of the company’s stock.

Wall Street Analyst Weigh In

A number of research firms have recently issued reports on FTNT. HC Wainwright reiterated a “buy” rating on shares of Fortinet in a report on Thursday, July 30th. HSBC raised their price target on Fortinet from $102.00 to $107.00 in a research report on Friday, July 31st. Truist Financial set a $175.00 target price on shares of Fortinet and gave the company a “buy” rating in a research report on Thursday. Capital One Financial upped their price target on Fortinet from $150.00 to $185.00 and gave the company an “equal weight” rating in a research report on Thursday, July 30th. Finally, Daiwa Securities Group upped their price objective on shares of Fortinet from $115.00 to $165.00 and gave the stock a “neutral” rating in a report on Tuesday, August 4th. One investment analyst has rated the stock with a Strong Buy rating, ten have assigned a Buy rating, twenty-four have issued a Hold rating and six have assigned a Sell rating to the stock. According to MarketBeat, Fortinet currently has an average rating of “Hold” and a consensus price target of $149.19.

Trending Headlines about Fortinet

Here are the key news stories impacting Fortinet this week:

• Positive Sentiment: Fortinet exceeded third-quarter expectations, reporting $2.08 billion in revenue, up roughly 20.5% year over year, and non-GAAP EPS of $0.91 versus consensus of $0.86. Product revenue increased 37%, billings rose 29% to $2.34 billion, and the company posted record operating margins. Fortinet Reports Strong Third Quarter 2026 Financial Results
• Positive Sentiment: Management raised fiscal 2026 EPS guidance to $3.54-$3.58, above the $3.38 consensus, and authorized an additional $1.2 billion for share repurchases. Service billings and deferred revenue also grew, suggesting some service demand may be delayed rather than permanently lost. Fortinet Raises Guidance
• Neutral Sentiment: Technical indicators show FTNT is oversold after its recent selloff, while analysts have continued raising earnings estimates. This could support a short-term rebound, although it does not resolve concerns about the company’s growth mix. Fortinet Oversold Analysis
• Negative Sentiment: The key concern is the divergence between product growth and recurring service growth: product revenue rose 37%, while service revenue increased only 13%. Investors worry that customers are buying cybersecurity hardware for AI infrastructure but delaying related service activations, making future revenue and cash flows less predictable. Breaching the Valuation: The Real Reason Fortinet Dropped
• Negative Sentiment: Fourth-quarter revenue guidance implies slower growth than in the latest quarter, while pricing benefits and lower-cost inventory are fading and component costs may rise. The softer outlook was particularly damaging because Fortinet had been trading at a premium valuation. Fortinet Stock Sinks
• Negative Sentiment: Several analysts cut price targets or moved to neutral and hold ratings, including Susquehanna, Citigroup, Barclays, Scotiabank and Bank of America. Jim Cramer also favored Palo Alto Networks and CrowdStrike over Fortinet, adding to investor skepticism. Analysts Cut Fortinet Forecasts
• Negative Sentiment: Broader technology and cybersecurity stocks are also declining amid concerns about lofty valuations, AI-related disruption and enterprise spending priorities. Fortinet’s results have therefore intensified sector-wide risk aversion rather than providing a catalyst for the group. Software Stocks Slide

Fortinet Company Profile

Fortinet, Inc develops cybersecurity products and services designed to protect networks, endpoints, applications, cloud environments and operational technology systems. The company’s portfolio includes next-generation firewalls, secure networking products, endpoint security, web application security, email security, identity and access solutions, and security information and event management tools.

Its product offerings include FortiGate network security appliances and cloud-based firewalls, along with FortiSwitch, FortiAP and FortiExtender solutions for secure connectivity.