Fortinet reported third-quarter earnings and revenue that topped Wall Street estimates while December quarter billings guidance fell short of expectations. Fortinet stock initially fell on the news but clawed back on Friday.
The cybersecurity firm reported Q3 earnings after the market close on Thursday.
Fortinet earnings in the September quarter rose 53% to 63 cents on an adjusted basis. Revenue climbed 13% to $1.51 billion.
Analysts expected Fortinet earnings of 52 cents a share on sales of $1.48 billion.
"The company's product revenue returned to growth for the first time in over a year as the company worked through digestion and demand issues," said William Blair anlyst Jonathan Ho in a report. "Fortinet indicated it expects an improved refresh cycle in the second half of 2025 to come from an abnormally large number of appliance end-of-life cycles slated for 2026."
Additionally, the Sunnyvale, Calif.-based firm said billings, a sales growth metric, rose 6% to $1.58 billion, compared with analyst estimates of $1.57 billion.
"Fortinet posted lackluster billings results against modest investor expectations," said BMO Capital Markets analyst Keith Bachman in a report. "Acquisitions added over $10 million to September quarter revenues, and if billings were adjusted for this benefit, in addition to inorganic deferred revenues, we would calculate September organic billings growth of about 5.5% year-over-year, which would have been about in line with consensus expectations."
Fortinet Earnings: Q4 Billings Guidance
For the current quarter ending in December, Fortinet forecast revenue of $1.59 billion at the midpoint of guidance, in line with estimates.
Fortinet expects billings of $1.95 billion versus estimates of $2 billion.
On the stock market today, Fortinet stock popped 9.2% to 91.40 in morning trading.
Heading into the Fortinet earnings report, the cybersecurity stock was up 37% in 2024.
"We are pleased to report another strong quarter as non-GAAP operating margin increased 830 basis points year over year to a company record of 36%, while revenue exceeded the high end of our guidance range, with growth of 13% year over year," Chief Executive Ken Xie said in the earnings release.
Fortinet Stock: Firewall Growth Slows
The company competes in the firewall network security market versus Palo Alto Networks, Check Point Software Technologies and others. Firewalls block online intrusions and monitor web-based apps.
Fortinet and many other cybersecurity firms are focused on a new growth market: Secure Access Service Edge. SASE offers a fast and cost-effective way of securing an organization's branch offices and remote workers.
Fortinet stock holds a Relative Strength Rating of 90 out of a best-possible 99, according to IBD Stock Checkup.
The Computer Software-Security group ranks No. 121 out of 197 industry groups that IBD tracks.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
