Fortinet (FTNT)·Q4 2025 Earnings Summary

Fortinet Crushes Q4 as Billings Surge 18%; Stock Jumps 10% After Hours

February 5, 2026 · by Fintool AI Agent

Fortinet delivered a strong beat across the board in Q4 2025, with revenue growing 15% to $1.91B and non-GAAP EPS of $0.81 exceeding consensus by nearly 10%. The cybersecurity leader's stock surged approximately 10% in after-hours trading to $86.84, up from the $78.93 close.* Billings of $2.37B grew 18% and exceeded the high end of guidance, driven by 40% growth in Unified SASE.

Did Fortinet Beat Earnings?

Yes — Fortinet beat on both revenue and EPS while billings came in above the high end of guidance.

*Values retrieved from S&P Global

Full Year 2025 Highlights:

• Revenue: $6.80B (+14% YoY)
• Billings: $7.55B (+16% YoY)
• Free Cash Flow: $2.21B
• Non-GAAP Operating Margin: 35.5%
• Exceeded the "Rule of 45" for the sixth consecutive year

How Did the Stock React?

Shares jumped approximately 10% in after-hours trading following the earnings release:

• Regular Session Close: $78.93 (down 2.5% on the day)
• After-Hours: $86.84 (up ~10% from close)*
• 52-Week Range: $70.12 – $114.82*

*Values retrieved from S&P Global

Fortinet has beaten EPS estimates for 8 consecutive quarters. The consistent beat streak reflects strong execution in its Secure Networking and emerging SASE/SecOps businesses.

What Did Management Guide?

Fortinet provided FY 2026 guidance that was roughly in-line with consensus, signaling confidence in continued double-digit growth:

Q1 2026 Guidance:

FY 2026 Guidance:

*Values retrieved from S&P Global

What Changed From Last Quarter?

Positive Developments:

1. SASE Acceleration: Unified SASE billings grew 40% in Q4, up from 24% for "SASE & SecOps" in the full year — showing accelerating momentum in cloud security
2. Product Revenue Inflection: Product revenue grew 20% YoY to $691M, the fastest growth rate in recent quarters, signaling hardware refresh cycle strength
3. Firewall Dominance: Fortinet now holds 55% unit market share in firewalls, cementing its position as the #1 vendor
4. Share Repurchase Expansion: Board authorized an additional $1.0B in buybacks, bringing total authorization to $10.25B through Feb 2027
5. Large Enterprise Momentum: $1M+ deals increased by 30% in volume and 40% in value, with US and Europe each delivering 30%+ growth in large deals
6. OT Security Surge: Operational technology billings grew 25%+ with broad demand for both hardware and software solutions

Key Strategic Updates:

• Announced integrated solution with NVIDIA embedding FortiGate VM on BlueField-3 DPUs for AI Factory infrastructure
• Named inaugural Google Unified Security Recommended partner for network protection
• Recognized as Gartner Peer Insights Customers' Choice for Security Service Edge for third consecutive year
• FortiOS 8.0 to be introduced at annual Accelerate conference in March, featuring AI security capabilities including agentic AI security

What Did Ken Xie Say?

CEO Ken Xie emphasized the company's competitive positioning and growth trajectory:

"We are pleased with our strong finish to the year, highlighted by an excellent fourth quarter driven by broad-based demand across our portfolio, which drove billings above the high end of our guidance. We continue to execute our strategy by accelerating our investments in high-growth Unified SASE and Security Operations markets, delivering strong momentum while further strengthening our Secure Networking leadership."

On the three unique advantages driving 40% SASE growth:

"First, Fortinet uniquely integrates leading firewall, SD-WAN, and SASE on a single OS, FortiOS, running on-premise or in the cloud, allowing customers to expand SASE in minutes and driving upsell across a large customer base. Second, we're supporting both sovereign SASE and public SASE... We are seeing strong demand in sovereign SASE, and none of our major SASE competitors offer sovereign SASE solutions. Third, our owned and long-term invested global cloud infrastructure, FortiCloud, delivers high performance and security at roughly one-third of the total cost of ownership of our peers."

On navigating component cost pressures:

"We view this just like 5 years ago as an opportunity to gain market share. We're well prepared with good inventory and also managed operation manufacture directly with our own operation center worldwide. Even with a little bit price raise, we still feel we are very competitive."

Revenue and Margin Trends

Revenue acceleration to 15% YoY in Q4 2025 reflects strong product demand and expanding SASE/SecOps adoption. Gross margins normalized in the high-70s/low-80s range, while operating margins remain healthy in the low-30s on a GAAP basis.

Segment Breakdown

Product revenue growth of 20% outpaced service revenue growth of 12%, suggesting enterprise customers are refreshing hardware ahead of expanding cloud security deployments. Unified SASE billings growth of 40% indicates the cloud transition is accelerating.

Notable Deal Wins

Management highlighted several significant wins that demonstrate platform expansion:

Capital Allocation

Share Repurchase Program:

• Board authorized additional $1.0B in buybacks
• Total authorization: $10.25B through February 28, 2027
• ~$1.38B remaining capacity (including new authorization)
• FY 2025 repurchases: $2.29B

Cash Position:

• Cash and equivalents: $2.50B
• Short-term investments: $1.09B
• Long-term investments: $340M
• Total liquidity: ~$3.9B

Free Cash Flow:

• FY 2025: $2.21B (32.5% margin)
• Adjusted FCF: $2.50B (36.8% margin)

Q&A Highlights: What Analysts Asked

On Sovereign SASE (TD Cowen, Piper Sandler): Ken Xie revealed that Sovereign SASE — where enterprises and service providers deploy SASE in their own data centers — may be an even bigger market than public SASE. "We don't see any of our competitors offer this Sovereign SASE approach," Xie noted. Fortinet is the "only leader" in this space, effectively doubling its total addressable market.

On Memory Pricing & Supply Chain (Barclays): Management confirmed they're raising prices 5-20% on specific products due to component cost pressures, particularly memory. Fortinet maintains ~6 months of inventory as a buffer and manages manufacturing directly with suppliers. CFO Christiane Ohlgart: "We've already raised some prices where we have some component cost pressures, and we will potentially continue to do so throughout the year."

On SASE Cannibalization Concerns (Citi): Xie pushed back firmly: "I never think SASE will cannibalize all this network security, even in branch. I feel it will be complement and also additional business opportunity." He highlighted the "three-in-one" approach where branch offices get networking, network security, and SASE in a single device — something competitors don't offer.

On Refresh Cycle Dynamics (Goldman Sachs): Rather than forcing end-of-support upgrades, Fortinet found a "win-win" by offering extended support at higher fees. More importantly, growth is coming from new functionality (SASE, internal segmentation, AI security) rather than forced refresh.

On M&A Philosophy (Scotiabank): Ken Xie emphasized discipline: "We tend to acquire technology or some talent instead of trying to buy some market or customer base." With valuations more reasonable, Fortinet is actively looking at opportunities, particularly in security operations.

Key Risks and Concerns

1. Competitive Pressure in SASE: While Fortinet is gaining share, competition from Zscaler, Palo Alto Networks, and emerging players remains intense in the cloud security market

2. Margin Pressure from Growth Investments: Q1 2026 guidance implies non-GAAP operating margin of 30-32%, below the 37% delivered in Q4, as the company invests in SASE and SecOps expansion

3. Product Revenue Volatility: Product revenue can be lumpy based on enterprise refresh cycles and large deal timing

4. Memory Cost Inflation: Management indicated 10-20% of bill of materials is memory-related; prices have been volatile though trending down recently

5. Macro Sensitivity: As noted in forward-looking statements, economic challenges and reduced IT spending could impact demand

Forward Catalysts

The Bottom Line

Fortinet delivered a clean beat in Q4 2025 with accelerating revenue growth, 40% SASE billings expansion, and product revenue inflection. The company's firewall leadership (55% unit share) provides a strong foundation to capture the SASE opportunity. FY 2026 guidance is roughly in-line with consensus but leaves room for upside if SASE momentum continues. The 10% after-hours pop reflects investor confidence in the growth trajectory.

Management's Q&A revealed important nuances: Sovereign SASE may double the addressable market with no competitor offering, pricing power of 5-20% on products offsets memory cost inflation, and the company sees supply chain disruption as a market share opportunity rather than threat. The upcoming Accelerate conference in March (FortiOS 8.0, agentic AI security) and new ASIC chip later this year provide near-term catalysts.

Key Metrics to Watch:

• Unified SASE billings growth sustainability (and Sovereign vs public mix)
• Product revenue growth trends (leading indicator for service revenue inflection in 2H 2026)
• Operating margin trajectory as growth investments ramp
• Competitive positioning vs Palo Alto Networks and Zscaler in SASE
• Memory cost impact and pricing realization

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View the full Fortinet Q4 2025 8-K filing and earnings call transcript for complete details.

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