Fortinet (NASDAQ:FTNT) Releases Quarterly Earnings Results, Beats Estimates By $0.05 EPS

Fortinet (NASDAQ:FTNT) issued its earnings results on Wednesday. The software maker reported $0.91 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.86 by $0.05, FiscalAI reports. Fortinet had a net margin of 28.17% and a return on equity of 191.54%. The firm had revenue of $2.08 billion for the quarter, compared to the consensus estimate of $2.06 billion.

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 Stock Performance

NASDAQ:FTNT traded down $10.92 during mid-day trading on Wednesday, hitting $174.08. 10,665,671 shares of the company traded hands, compared to its average volume of 5,788,922. The company has a quick ratio of 1.19, a current ratio of 1.28 and a debt-to-equity ratio of 0.32. The stock’s fifty day moving average price is $171.59 and its 200-day moving average price is $127.21. The firm has a market cap of $127.72 billion, a price-to-earnings ratio of 61.30, a price-to-earnings-growth ratio of 3.36 and a beta of 1.03. Fortinet has a one year low of $73.55 and a one year high of $197.13.

Wall Street Analysts Forecast Growth

FTNT has been the topic of several analyst reports. The Goldman Sachs Group reaffirmed a “buy” rating and issued a $190.00 price objective (up from $116.00) on shares of Fortinet in a research report on Thursday, July 30th. BTIG Research increased their price objective on Fortinet from $186.00 to $203.00 and gave the company a “buy” rating in a research report on Thursday, July 30th. Stifel Nicolaus set a $175.00 target price on Fortinet and gave the stock a “hold” rating in a research report on Thursday, July 30th. TD Cowen reaffirmed a “buy” rating and set a $225.00 price target (up from $215.00) on shares of Fortinet in a report on Tuesday, October 13th. Finally, HC Wainwright reiterated a “buy” rating on shares of Fortinet in a research note on Thursday, July 30th. One analyst has rated the stock with a Strong Buy rating, eleven have assigned a Buy rating, twenty-one have assigned a Hold rating and six have assigned a Sell rating to the stock. According to data from MarketBeat.com, Fortinet has an average rating of “Hold” and an average price target of $162.36.

Fortinet News Roundup

Here are the key news stories impacting Fortinet this week:

• Positive Sentiment: Fortinet reported third-quarter revenue of $2.08 billion, up 20% year over year and slightly above the $2.06 billion analyst consensus. Product revenue increased 37% to $765 million, while billings rose 29% to $2.34 billion, indicating healthy demand for its cybersecurity portfolio. Fortinet Reports Strong Third Quarter 2026 Financial Results
• Positive Sentiment: Non-GAAP earnings per share were $0.91, exceeding estimates of $0.86, while GAAP operating margin reached 34% and non-GAAP operating margin was 38%. Operating cash flow of $946 million and free cash flow of $865 million further supported the results. Fortinet Quarterly Press Release
• Positive Sentiment: The board increased Fortinet’s share-repurchase authorization by $1.2 billion, leaving $2 billion available, potentially providing support for the stock and signaling confidence in cash generation. Fortinet Reports Strong Third Quarter 2026 Financial Results
• Positive Sentiment: Recent analyst optimism, Fortinet’s FortiLink SASE launch, its AI-focused FortiGuard Inline AI Security Service, and an expanded Atos partnership reinforce the company’s strategy of expanding beyond traditional firewalls into cloud, branch, and AI security. Fortinet Expands Unified SASE
• Neutral Sentiment: Fortinet has already gained roughly 138% since the start of the year, raising the likelihood that investors are locking in profits even after a favorable earnings report. The Bet Fortinet Holders Made Before a 138% Jump
• Negative Sentiment: At approximately 61 times earnings, Fortinet’s valuation leaves limited room for execution or guidance disappointments. The earnings release highlighted historical results but did not provide a specific new outlook in the supplied reports, which may have encouraged selling despite the beat.

Insiders Place Their Bets

In other news, COO John Whittle sold 2,835 shares of the stock in a transaction on Tuesday, September 15th. The shares were sold at an average price of $168.74, for a total value of $478,377.90. Following the completion of the sale, the chief operating officer directly owned 96,987 shares of the company’s stock, valued at $16,365,586.38. This represents a 2.84% decrease in their ownership of the stock. The sale was disclosed in a document filed with the SEC, which is available at this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, VP Michael Xie sold 3,121 shares of the company’s stock in a transaction on Monday, August 3rd. The stock was sold at an average price of $162.63, for a total transaction 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 $1,613,022,886.80. This represents a 0.03% decrease in their position. 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. In the last 90 days, insiders have sold 221,303 shares of company stock worth $36,164,034. Company insiders own 17.60% of the company’s stock.

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.