TLDR
- Fortinet (FTNT) stock traded at $127.70 premarket Thursday, down about 27% from Wednesday’s close of $174.08.
- Q3 adjusted earnings of 91 cents a share and $2.08 billion in revenue both topped estimates.
- Product revenue grew 37% to $765 million, short of the roughly 50% investors wanted.
- Jefferies flagged a services revenue miss and possible pull-forward deals.
- Fortinet raised its Q4 and full-year guidance, and lifted billings guidance for the third time this year.
Fortinet (FTNT) stock was trading at $127.70 in premarket on Thursday, down about 27% from Wednesday’s close of $174.08. The drop came after a third-quarter report that topped estimates.
Wall Street usually likes a beat and a raise. This time, it did not.
The stock had already closed down 6% on Wednesday, before results landed after the bell. Premarket trading then pushed the losses much further.
Adjusted earnings were 91 cents a share, ahead of the 86 cents analysts expected. Revenue rose about 20% to $2.08 billion, compared with the $2.06 billion forecast.
Net income climbed to $635.5 million, or 86 cents per diluted share. A year earlier, it was $473.9 million, or 62 cents.
Adjusted earnings were 74 cents a year ago. The GAAP operating margin widened to 33.9% from 31.7%.
Product Growth Cools
Product revenue jumped 37% to $765 million. That beat estimates, but investors were hoping for something near 50%.
Management called it a return to normal growth. It said looming price increases and competition from AI frontier models fueled a surge in the first half.
Jefferies analysts flagged a miss in services revenue. They said it raises concerns about customers buying extra products and how long growth can last.
The analysts also said the third quarter may have gotten a lift from deals pulled forward. That could hurt growth, particularly in the middle of 2027, they wrote.
Billings, which can point to future revenue, rose 29% to $2.34 billion. Fortinet has now raised its billings guidance three times this year.
Fourth-Quarter and Full-Year Outlook
For the fourth quarter, Fortinet expects adjusted earnings of 93 cents to 95 cents a share. Analysts were looking for 88 cents.
Revenue is guided to $2.155 billion to $2.245 billion, versus $2.16 billion expected. Billings are seen at $2.775 billion to $2.925 billion.
For the full year, the company sees adjusted earnings of $3.54 to $3.58 a share. Analysts had penciled in $3.45.
Full-year revenue is forecast at $8.125 billion to $8.215 billion, about 20% growth at the midpoint. Billings are seen at $9.568 billion to $9.718 billion.
CEO Ken Xie said AI opens up new attack surfaces, and network security remains the foundation of AI security. He said demand allowed the latest billings raise.
Fortinet also highlighted new services that monitor AI activity and prevent data exposure. It cited work with Oracle and Microsoft on secure AI adoption.
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