Fortinet shares surge on first-quarter earnings beat and raised outlook

Shares of Fortinet Inc. surged more than 15% in late trading today after the cybersecurity company reported strong beats in revenue and earnings in its fiscal 2026 first quarter and lifted its full-year outlook.

For the quarter that ended on March 31, Fortinet reported adjusted earnings per share of 82 cents, up from 58 cents per share in the same quarter of last year, on revenue of $1.85 billion, up 20% year-over-year. Analysts had been expecting earnings of 61 cents per share on revenue of $1.73 billion.

The company’s product revenue, which tracks enterprise firewall demand, rose 41% year-over-year, to $645 million. Service revenue increased 11% to $1.20 billion, and billings, a forward indicator that captures revenue plus the change in deferred revenue, grew 31%, to $2.09 billion.

Net income rose to $534.5 million from $433.4 million a year earlier. Operating cash flow came in at $1.08 billion and free cash flow at $1.01 billion, both quarterly records for the company.

The quarter also saw Fortinet repurchasing $823 million of stock and repaying $500 million in senior notes that came due. Cash and short-term investments stood at $3.29 billion as of the end of March.

Fortinet attributed the increasing demand for its products to a refresh cycle in its installed base of firewall appliances and to growing interest in its secure access service edge offerings.

The company introduced FortiOS 8.0 during the quarter, the latest release of the operating system that powers the Fortinet Security Fabric, with new artificial intelligence-driven security features, next-generation SASE capabilities and quantum-safe cryptography. Fortinet also added the FortiGate 3500G and FortiGate 400G to its G Series firewall portfolio.

Fortinet also noted that it’s collaborating with multiple AI providers, including Anthropic PBC as part of Project Glasswing, along with OpenAI Group PBC and others. The company did not provide further details on the scope of the work.

“We are very pleased with our excellent first-quarter results, exceeding the high end of our guidance through strong execution and broad-based demand across our portfolio and geographies,” founder and Chief Executive Ken Xie said in the company’s earnings release. “Billings grew 31% year-over-year, driven by the continued convergence of networking and security, an approach Fortinet has led for 26 years and by an increasingly complex threat environment that is being intensified by AI.”

For its fiscal second quarter, Fortinet expects revenue of $1.83 billion to $1.93 billion, billings of $2.09 billion to $2.19 billion and adjusted earnings per share of 72 to 76 cents.

The company raised its full-year 2026 outlook and is now expecting revenue of $7.71 billion to $7.87 billion, up from earlier guidance, with billings of $8.80 billion to $9.10 billion and adjusted earnings of $3.10 to $3.16 per share. The midpoint of the new revenue range represents about 15% annual growth and was ahead of the $7.6 billion expected by analysts.

Photo: Fortinet