How will prior price increases affect product growth in Q3 and Q4?

Christiane Ohlgart states that a high single-digit impact from price increases is built into H2 billings assumptions, noting it depends on product mix. Ken Xie adds that price adjustments are made in real-time based on component costs to maintain gross margin, and there's no incentive for channel inventory build-up due to their policies. “We have approximately high single-digit impact built into our billings assumptions for the second half. And it's very dependent on product mix and what is being sold because -- I mean, yes, there were price increases, but they were not for every product and every service.”

How is AI driving the convergence of firewall and SASE?

Ken Xie explains that AI generates significant additional machine-to-machine traffic, especially east-west traffic within data centers and enterprises. This accelerates the convergence of network and network security, driving demand for better visibility and control, which the SASE Firewall is uniquely positioned to address with its local processing capabilities. “AI, definitely, we see generate a lot of additional traffic. There's some study whether a few weeks ago or a few months ago, the machine-to-machine traffic first time passing the human-to-machine or human-to-human traffic on the Internet. So that's definitely the AI agent and a lot of other AI applications drive a lot of traffic.”

What drove the SASE acceleration (SD-WAN vs. SSE)? Is SD-WAN becoming a bigger SASE consideration?

Ken Xie notes that FortiSASE billings more than doubled year-over-year, and SD-WAN also saw strong growth, taking market share from competitors due to their acquisition-based, separate approaches. He highlights Fortinet's unique sovereign/on-premise SASE solution, which meets specific customer needs for local data processing that competitors cannot match, as a key driver. “We see the FortiSASE more than double year-over-year. And the SD-WAN also, we see pretty strong growth because all the other top 5 competitors, all come from acquisition, and they all have a separate approach compared to -- whether the firewall, SD-WAN and SASE.”

FTNT

Fortinet (FTNT) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Information Technology· Jul 29, 2026

Source: earnings call transcript

Executive summary

Fortinet Q2 FY26 — Strong Billings and Product Growth Driven by SASE Firewall and AI Demand

Fortinet delivered strong Q2 FY26 results, exceeding guidance across key metrics, driven by broad-based demand and execution. The company is capitalizing on the convergence of networking and security with its "SASE Firewall" strategy, which integrates proprietary FortiOS and FortiASIC technology to address AI-driven security needs and sovereign SASE requirements. This integrated platform approach positions Fortinet for continued growth and market share capture.

Highlights

Total billings grew 33% to $2.37 billion, exceeding guidance.
Total revenue increased 26% to $2.05 billion, propelled by 52% product revenue growth to $773 million.
Free cash flow more than tripled year-over-year to $966 million.
Non-GAAP operating margin reached a Q2 record of 38%, up 490 basis points.
Fortinet's SASE Firewall business grew 34% to over $2 billion, cementing its position as a top player.

Concerns

AI-enabled sophisticated attacks
Evolving regulatory requirements
Expanding enterprise attack surfaces
Geopolitical uncertainty

Guidance & targets

Category	Target	Timeline	Confidence
Billings	$2.25B to $2.35B high materiality	Q3 · FY26	High
Revenue	$2.01B to $2.1B high materiality	Q3 · FY26	High
Non-GAAP Gross Margin	79% to 81% medium materiality	Q3 · FY26	High
Non-GAAP Operating Margin	35% to 37% high materiality	Q3 · FY26	High
Non-GAAP EPS	$0.83 to $0.87 high materiality	Q3 · FY26	High
Infrastructure Investments	$100M to $150M medium materiality	Q3 · FY26	High
Non-GAAP Tax Rate	18% low materiality	Q3 · FY26	High
Cash Taxes	$100M to $130M low materiality	Q3 · FY26	High
Billings	$9.35B to $9.55B high materiality	FY26	High
Revenue	$8.02B to $8.18B high materiality	FY26	High
Service Revenue	$5.18B to $5.22B medium materiality	FY26	High
Non-GAAP Gross Margin	79% to 81% medium materiality	FY26	High
Non-GAAP Operating Margin	35% to 37% high materiality	FY26	High
Non-GAAP EPS	$3.41 to $3.47 high materiality	FY26	High
Infrastructure Investments	$350M to $550M medium materiality	FY26	High
Non-GAAP Tax Rate	18% low materiality	FY26	High
Cash Taxes	$400M to $450M low materiality	FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Secure Networking Driven by persistent high FortiGate demand as customers expanded their network security, including operational technology environments, LAN Edge, and AI data centers. Billings growth: 34%	—	34%	—	—
Unified SASE Momentum built throughout the quarter, benefiting from expansion sales across the installed base, competitive replacements, and new wins with large enterprises, driven by flexible deployment strategies including the new SASE Firewall strategy. Billings growth: 35%FortiSASE billings growth: >100%Adoption within installed base: 90% of large enterprises	—	35%	—	—
AI-driven Security Operations Driven by strong upsell momentum as the installed base increasingly consolidates point solutions onto the broader platform. Billings growth: 25%	—	25%	—	—
Operational Technology (OT) Reflecting continued adoption of Fortinet's solutions in industrial environments, driven by increasing cyber threats, AI adoption, and geopolitical uncertainty. Billings growth: 55%	—	55%	—	—

FTNT operating KPIs by quarter

FTNT operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2024 Q4 FY24	Jun 2025 Q2 FY25	Sep 2025 Q3 FY25	Dec 2025 Q4 FY25	Mar 2026 Q1 FY26	Change vs prior quarter
New logos	6,900 In addition, we added a record 6,900 new logos, driven by close alignment with our channel partners. Source: earnings call transcript	6,900+ Over 6,900 new organizations chose our unified single FortiOS platform to power their cybersecurity strategy. Source: earnings call transcript	~6,600 Approximately 6,600 new organizations chose our Unified single FortiOS platform to power their cybersecurity strategy, which exemplifies our continued strong position in all segments of the market. Source: earnings call transcript	7,200 7,200 new organizations selected our Unified FortiOS platform, reinforcing our strong position across all market segments. Source: earnings call transcript	6,600+ Finally, customer demand remained broad-based across segments, demonstrating the durability of our platform strategy with over 6,600 new organizations selecting our FortiOS platform during the quarter, reinforcing the breadth of demand across SMB, mid-market and enterprise customers. Source: earnings call transcript	—
Remaining performance obligation (RPO)	$6.4B RPO grew 12% to $6.4 billion. Source: earnings call transcript	$6.64B Total RPO grew by 12% to $6.64 billion, while current RPO grew by 15% to $3.45 billion. Source: earnings call transcript	—	—	—	+3.8%
FortiSASE penetration rate Large enterprise	—	13% As a result, 13% of large enterprise customers have purchased FortiSASE and increased over 60% year-over-year. Source: earnings call transcript	15% Our strong leadership position is reflected in customer adoption with 15% of large enterprise customers now using FortiSASE, represent 55% growth as shown on Slide 10. Source: earnings call transcript	16% Furthermore, SASE adoption momentum has remained strong, as 16% of our large enterprise customers have purchased FortiSASE, an increase of over 50%, highlighting our continued expansion of FortiSASE in our customer base. Source: earnings call transcript	18% FortiSASE expansion within our customer base also remained strong with 18% of our large enterprise customers now having purchased FortiSASE, an increase of over 45%. Source: earnings call transcript	+2 pt
Capital expenditures Infrastructure	—	$168M Infrastructure investments were $168 million, up $145 million as we continue to build out our infrastructure footprint to support FortiSASE, FortiCloud and other services. Source: earnings call transcript	$88M Infrastructure investments were $88 million, up $51 million as we continue to build out our infrastructure footprint. Source: earnings call transcript	—	—	-47.6%
Annual recurring revenue (ARR) Unified SASE	—	$1.15B With regards to ARR, Unified SASE increased by 22% to $1.15 billion and SecOps increased by 35% to $463 million. Source: earnings call transcript	$1.22B With regards to ARR, Unified SASE increased by 13% to $1.22 billion and SecOps increased by 25% to $472 million. Source: earnings call transcript	$1.28B With regards to ARR, Unified SASE increased by 11% to $1.28 billion, which included an increase of over 90% for FortiSASE ARR, while SecOps ARR increased by 21% to $491 million. Source: earnings call transcript	—	+4.9%
Annual recurring revenue (ARR) SecOps	—	$463M With regards to ARR, Unified SASE increased by 22% to $1.15 billion and SecOps increased by 35% to $463 million. Source: earnings call transcript	$472M With regards to ARR, Unified SASE increased by 13% to $1.22 billion and SecOps increased by 25% to $472 million. Source: earnings call transcript	$491M With regards to ARR, Unified SASE increased by 11% to $1.28 billion, which included an increase of over 90% for FortiSASE ARR, while SecOps ARR increased by 21% to $491 million. Source: earnings call transcript	—	+4%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

Product	Type	Timeline
FortiGate 1200G	launch	Announced yesterday (July 28, 2026)
FortiSOC	launch	—
FortiEndpoint	expansion	—

Deals & partnerships

New cloud provider Secure AI data centers for generative AI workloads 8-figure

Selected Fortinet to secure AI data centers. Chose Fortinet for strong price for performance advantage and ability to deliver scalable, high-throughput security, accelerating deployment of new capacity.

Global pharmaceutical company FortiSASE deal to secure over 45,000 users 7-figure

Chose Fortinet for its unified architecture and integrated platform approach across SD-WAN, next-generation firewall, and switching. Key differentiator was the ability to extend security processing to the edge through on-premises appliances, providing greater control, improved performance, and deeper visibility.

Major utility organization Support large-scale communications modernization OT initiative 7-figure

Selected Fortinet to support an OT initiative spanning thousands of distributed field locations. The deployment leverages the integrated FortiOS platform to enable reliable, secure connectivity for operational environments while simplifying management and reducing infrastructure complexity.

Risks & headwinds

AI-enabled sophisticated attacks Ongoing

Increasing speed and complexity of threats

Mitigation:Fortinet's FortiOS platform and FortiASIC technology allow enterprises to securely scale their next-generation AI environment with faster and better protection and simplified operation.

Evolving regulatory requirements Ongoing

Requires companies to act

Mitigation:Fortinet's solutions address evolving compliance and sovereignty requirements, playing directly into its strong market position, especially in EMEA and public sector.

Expanding enterprise attack surfaces Ongoing

Across cloud, AI, OT, and critical infrastructure environments

Mitigation:Fortinet's integrated platform approach provides shared telemetry, improved visibility, and reduced operational overhead to navigate growing complexity.

Geopolitical uncertainty Ongoing

Contributing to strong demand for OT portfolio

Mitigation:Fortinet's integrated platform approach provides visibility across both OT and IT networks, addressing critical business and board-level risk priorities.

What to watch in Q3 FY26

Service Revenue Growth Trajectory

Going forward

Current 14% YoY in Q2 FY26

Target Positive trajectory

Why it matters

Reinforces the compounding strength and high margin predictability of Fortinet's recurring revenue model.

We believe the first quarter of 2026 marked the trough for our service revenue growth rate, and we anticipate a positive trajectory in our growth rates going forward.

Find out whether FTNT delivers this. Inve re-checks your case every morning.

Q&A highlights

What's driving the accelerating growth and how sustainable is it?

Ken Xie attributes the accelerating growth to new market trends like AI reshaping security, Fortinet's differentiated strategy (ASIC, infrastructure, R&D), and the "SASE Firewall" concept replacing traditional firewalls and competing with cloud-only SASE. He believes it's a long-term growth trend, similar to the shift from traditional firewalls to UTM NextGen firewalls 20 years ago.

“We do believe the growth actually is a long term for Fortinet. Definitely, you see the AI changed a lot of our security landscape. And also with our kind of like investment like from the ASIC chip, from our own infrastructure, from the R&D innovation, we also positioned much better than any of our other competitors, that's also the reason I kind of tried to call a new term, which I'm not sure will be -- everybody would like that is a SASE Firewall.”

asked by Saket Kalia · answered by Ken Xie

2 min read 6 chapters

Detailed narrative

SASE Firewall Strategy and Market Opportunity

Ken Xie introduced the "SASE Firewall" concept, combining secure networking and Unified SASE on FortiOS, which he believes represents a massive opportunity for accelerated growth. This new approach addresses a total addressable market approximately 2 to 3 times larger than cloud-only SASE solutions, primarily due to its unique ability to offer easily deployable on-premise sovereign SASE alongside cloud SASE, meeting customer demands for data privacy and local enforcement.

AI-Driven Security Demand and Innovation

The company highlighted strong demand for AI-driven security solutions, with billings in this pillar growing 25%. AI is rapidly reshaping the security landscape, increasing the speed and complexity of threats. Fortinet is uniquely positioned with its FortiOS platform and FortiASIC technology to help enterprises securely scale their next-generation AI environments, protect AI models and data sets, and secure large volumes of east-west traffic.

Accelerating Product and Service Revenue

Product revenue surged 52% to $773 million, driven by robust FortiGate unit growth and increased Average Selling Prices (ASPs) as customers shifted to higher-performing models. Service revenue grew 14% to $1.27 billion, with management noting Q1 FY26 marked the trough for service revenue growth and anticipating a positive trajectory going forward, reinforcing the durability of its recurring revenue model.

Leadership in OT Security

OT billings increased over 55%, reflecting continued adoption of Fortinet's solutions in industrial environments. This growth is attributed to Fortinet's long-term investment in OT, its integrated platform approach providing visibility across IT and OT networks, and increasing regulatory requirements and cyber threats targeting critical infrastructure globally, particularly in EMEA.

Strong Profitability and Cash Flow Generation

Fortinet achieved a non-GAAP operating margin of 38%, a second-quarter record and a 490 basis point increase year-over-year, exceeding guidance. This performance was driven by stronger-than-expected revenue growth, disciplined cost management, and growing efficiencies from internal AI initiatives. Free cash flow more than tripled year-over-year to $966 million, demonstrating exceptional operational performance and working capital discipline.

Key Customer Wins and Competitive Differentiators

The company secured an 8-figure AI data center win with a new cloud provider and a 7-figure FortiSASE deal with a global pharmaceutical company, displacing an incumbent SSE-only provider. These wins highlight Fortinet's unified architecture, integrated platform approach, ability to extend security processing to the edge through on-premises appliances (FortiSASE Outpost), and strong price-for-performance advantage as key competitive differentiators.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.