Shares in Fortinet fell Friday after the cybersecurity firm reported March-quarter earnings and revenue that topped analyst estimates. First quarter billings for Fortinet stock missed Wall Street's target.
Fortinet earnings came in at 43 cents, up 26% from a year earlier. Revenue climbed 7% to $1.353 billion.
Analysts expected Fortinet earnings of 38 cents a share on sales of $1.34 billion.
Additionally, the Sunnyvale, Calif.-based firm said billings, a sales growth metric, fell 7% to $1.41 billion, missing estimates of $1.43 billion. Fortinet cited weakness in its European business for the billings miss.
On the stock market today, Fortinet stock tumbled 9.7% to close at 58.88.
For full-year 2024, Fortinet said it expects billings growth of 2%, down from 14% growth in 2023.
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 Stock: Firewall Growth Slows
Growth has slowed in the firewall market as companies buy less computer network gear for on-premises data centers. Companies are shifting business apps and workloads to distributed cloud platforms.
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 is expanding promotions around SASE to drive traction in 2024, but we think success remains isolated to small and medium-sized businesses and we are skeptical of a firewall rebound near-term," said Needham analyst Matt Dezort in a report.
At UBS, analyst Roger Boyd said in a report: "While management sounds incrementally better on pipeline visibility and guidance, it still seems like business is very hard to predict. Net, while numbers look increasingly de-risked and shares are getting more inexpensive, we remain on the sideline on a view that more substantial momentum with SASE products will take time to build."
FTNT stock holds a Relative Strength Rating of 38 out of a best-possible 99, according to IBD Stock Checkup.
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Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
