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    FTNT
    Earnings call· Dec 2025(Q4 FY25)

    Fortinet Q4 FY25 earnings call FTNT

    Feb 5, 2026 Source

    Executive summary

    Fortinet, Inc. Q4 FY25 — Strong Billings Growth Driven by Unified SASE and Product Revenue

    Fortinet delivered a strong Q4 FY25, exceeding guidance with robust billings and product revenue growth, primarily fueled by Unified SASE and broad-based demand. The company maintained strong operating margins and free cash flow, reaffirming its midterm targets for market-beating growth and Rule of 45 achievement. Strategic investments in AI security and Sovereign SASE are expected to drive continued expansion and market leadership.

    Highlights

    5

    • Total billings grew 18% to $2.37 billion, exceeding the high end of guidance.

    • Revenue grew 15% to $1.91 billion, with product revenue accelerating over 20% to $691 million.

    • Unified SASE billings grew 40%, representing 27% of total billings.

    • Operating margin was strong at 37.3%, exceeding the high end of guidance.

    • Adjusted free cash flow was $589 million (31% margin), up $130 million.

    Concerns

    2

    • Service revenue grew 12% to $1.21 billion, reflecting lower product revenue in 2024.

    • Q1 FY26 operating margin guidance of 30% to 32% reflects timing of marketing events and modest U.S. dollar headwind.

    Guidance & targets

    21
    CategoryTargetConfidence
    Q1 FY26 Billings
    $1.77 billion to $1.87 billion
    high materiality
    High
    Q1 FY26 Revenue
    $1.7 billion to $1.76 billion
    high materiality
    High
    Q1 FY26 Non-GAAP Gross Margin
    80% to 81%
    medium materiality
    High
    Q1 FY26 Non-GAAP Operating Margin
    30% to 32%
    high materiality
    High
    Q1 FY26 Non-GAAP Earnings Per Share
    $0.59 to $0.63
    high materiality
    High
    Q1 FY26 Infrastructure Investments
    $80 million to $120 million
    medium materiality
    High
    Q1 FY26 Non-GAAP Tax Rate
    18%
    low materiality
    High
    Q1 FY26 Cash Taxes
    $45 million to $50 million
    low materiality
    High
    Full Year 2026 Billings
    $8.4 billion to $8.6 billion
    high materiality
    High
    Full Year 2026 Revenue
    $7.5 billion to $7.7 billion
    high materiality
    High
    Full Year 2026 Service Revenue
    $5.05 billion to $5.15 billion
    medium materiality
    High
    Full Year 2026 Non-GAAP Gross Margin
    79% to 81%
    medium materiality
    High
    Full Year 2026 Non-GAAP Operating Margin
    33% to 36%
    high materiality
    High
    Full Year 2026 Non-GAAP Earnings Per Share
    $2.94 to $3.00
    high materiality
    High
    Full Year 2026 Infrastructure Investments
    $350 million to $450 million
    medium materiality
    High
    Full Year 2026 Non-GAAP Tax Rate
    18%
    low materiality
    High
    Full Year 2026 Cash Taxes
    $350 million to $400 million
    low materiality
    High
    Midterm Billings CAGR
    above 12%
    high materiality
    High
    Midterm Revenue CAGR
    above 12%
    high materiality
    High
    Midterm Rule of 45
    achieving the Rule of 45
    high materiality
    High
    Midterm Product Revenue Growth
    10% to 15% on average
    medium materiality
    High

    Industry KPIs

    8
    MetricValueDetails
    Revenue growth$1.91 billionUSD
    Arr net new arr$1.28 billionUSD
    Bookings billings$2.37 billionUSD
    Customer account count7,200organizations
    Large customer cohortsover 30%%
    Large deal new logo metrics7,200organizations
    Operating FCF margin rule of 4037.3%%
    Ai product adoption monetization6%%

    Product announcements

    2
    ProductTypeDetails
    FortiOS 8.0launch
    New ASIC Chiproadmap

    Deals & partnerships

    5
    NVIDIApartnership

    Leveraging their BlueField-3 DPU to secure AI infrastructure.

    Large consumer services companycustomer contract7-figure

    Existing Forti SD-WAN customer selected FortiSASE to secure over 10,000 users. Win driven by single OS approach, integrating SD-WAN and SASE, delivering strong performance at lower TCO. Customer chose Fortinet for consistent security policy across FortiSASE and FortiGate, leveraging global PoPs for secure private access at scale.

    Leading global data center provider supporting AI and cloud workloadscustomer contract8-figure

    Signed to support rapid global expansion. Customer selected Fortinet for predictable, scalable investment model aligning security growth with data center build-out. Standardizing on FortiGate, FortiSwitches, and FortiAPs to streamline operations across IT and OT environments, including critical power, cooling, and physical security systems.

    Major utility companycustomer contracthigh 7-figure

    Expanded partnership to secure its operational technology environment. Deal includes comprehensive solutions for network segmentation, identity and access management, and zero-day threat detection across advanced distribution management system, plus adoption of FortiAI. Win driven by ability to automate critical security operations, expertise in critical national infrastructure, and compelling price for performance.

    Fortune 100 companycustomer contract8-figuremultiyear

    Competitive displacement win for Unified SASE, selecting virtual firewall solution to secure approximately 1,800 store locations. Customer chose FortiGate VM through FortiFlex points-based consumption program for flexible hybrid firewall deployments. Selected for program flexibility, ability to meet technical requirements at scale, and consolidation of security on a single architecture for long-term cost efficiency.

    Capital programs

    1
    Senior Debt Repaymentplanned
    Period spend: $500 million

    Benefit: Reduced net interest income for the year.

    First tranche repayment at maturity. Alongside lower market interest rates, this will reduce net interest income for the year.

    Risks & headwinds

    4
    Service revenue growth lagging product revenue growthQ4 FY25, expected to pick up in H2 FY26

    Service revenue grew 12% in Q4 FY25, reflecting lower product revenue in 2024.

    Mitigation: Product revenue growth in 2025 is a leading indicator for future service revenue growth, expected to pick up in H2 2026. Price increases on products will also positively impact service revenue over time.

    Operating margin pressure in Q1 FY26Q1 FY26

    Q1 FY26 non-GAAP operating margin guidance of 30% to 32%.

    Mitigation: Due to timing of several marketing events and a modest headwind from U.S. dollar weakness.

    Increased memory component costsOngoing

    Product pricing increases of 5% to 20% on specific products.

    Mitigation: Maintaining 6 months of inventory, negotiating with suppliers, and implementing targeted price increases to maintain profitability and gross margins. Leveraging ASIC technology for performance advantage.

    Modest headwind from U.S. dollar weaknessQ1 FY26

    Not quantified, but factored into Q1 FY26 guidance.

    Mitigation: Factored into Q1 guidance.

    Q&A highlights

    8

    What drove the strong Unified SASE billings and overall Q4 performance, and what gives confidence for 2026 guidance?

    Ken Xie highlighted three key advantages for Unified SASE: Sovereign SASE market leadership (no major competitors), integrated FortiOS (SD-WAN, SASE, network security on one OS), and cost advantage from long-term infrastructure investment (1/3 TCO). Christiane Ohlgart added that strong execution was broad-based across enterprise, OT, SASE, and AI, providing confidence for continued growth. John Whittle emphasized competitive advantages, market growth, and diversification.

    “I believe the Sovereign SASE market is probably even bigger than the current Public SASE. That's all the other vendors doing right now. But we don't see any of them try to get in the Sovereign SASE or have the function to supporting Sovereign SASE.”

    asked by Shaul Eyal · answered by Ken Xie

    2 min read6 chapters

    Detailed Narrative

    01

    Unified SASE Leadership and Differentiation

    Fortinet's Unified SASE demonstrated strong growth, driven by its integrated platform approach, unique support for Sovereign SASE, and a cost-effective global cloud infrastructure. The company believes these differentiators position it as a leader in the rapidly expanding SASE market, aiming for the top position within a few years.

    02

    Product Revenue Acceleration and Market Share Gains

    The company experienced accelerated product revenue growth in the latter half of the year, reflecting broad-based demand and continued market share expansion. This trend is anticipated to serve as a key indicator for future service revenue growth, expected to improve in the second half of the upcoming fiscal year.

    03

    Strategic Investments in AI and OT Security

    Fortinet is seeing significant traction in AI-driven security solutions, with a growing number of AI-powered offerings contributing to customer consolidation. The company is also expanding its leadership in operational technology (OT) and cyber-physical systems, including a partnership with NVIDIA and upcoming AI security enhancements in FortiOS 8.0.

    04

    Strong Financial Performance and Capital Allocation

    Fortinet achieved robust financial results for the full fiscal year, maintaining its commitment to balancing growth and profitability. The company generated substantial free cash flow and continued its disciplined capital allocation strategy, including significant share repurchase authorizations.

    05

    Diversified Business Model and Competitive Advantages

    The company's business model is highly diversified across various markets and customer segments, providing resilience against economic fluctuations. Its proprietary ASIC technology and unified operating system offer distinct competitive advantages, enabling superior performance and lower total cost of ownership. Ongoing R&D investments underscore its commitment to innovation.

    06

    Pricing Strategy and Supply Chain Management

    Fortinet has proactively adjusted product pricing in response to component cost pressures, aiming to preserve its healthy gross margins. The company's strategic inventory management and direct manufacturing approach enable it to navigate supply chain dynamics effectively, positioning it to gain market share.

    AI-generated summary of the company’s earnings call. Not investment advice.