FTNT

Technology

Fortinet

Price Chart

Market Data

Financials

XBRL · SEC EDGAR

2010–2025(16yr)

Revenue

Net Income

Free CF

Metric	FY 2010	FY 2011	FY 2012	FY 2013	FY 2014	FY 2015	FY 2016	FY 2017	FY 2018	FY 2019	FY 2020	FY 2021	FY 2022	FY 2023	FY 2024	FY 2025Latest	YoY
Revenue	$324.7M	$433.6M	$533.6M	$615.3M	$770.4M	$1.0B	$1.3B	$1.5B	$1.8B	$2.2B	$2.6B	$3.3B	$4.4B	$5.3B	$6.0B	$6.8B	+14.2%
Gross Profit	$239.5M	$320.0M	$386.2M	$434.7M	$539.4M	$722.5M	$937.6M	$1.1B	$1.4B	$1.7B	$2.0B	$2.6B	$3.3B	$4.1B	$4.8B	$5.5B	+14.0%
Gross Margin	73.8%	73.8%	72.4%	70.6%	70.0%	71.6%	73.5%	74.2%	75.0%	76.5%	78.0%	76.6%	75.4%	76.7%	80.6%	80.5%	-0.1pp
Operating Income	$55.3M	$88.9M	$100.5M	$72.1M	$59.3M	$14.9M	$42.9M	$109.8M	$231.0M	$344.2M	$531.8M	$650.4M	$969.6M	$1.2B	$1.8B	$2.1B	+15.6%
Operating Margin	17.0%	20.5%	18.8%	11.7%	7.7%	1.5%	3.4%	7.3%	12.8%	16.0%	20.5%	19.5%	21.9%	23.4%	30.3%	30.7%	+0.4pp
Net Income	$41.2M	$62.5M	$66.8M	$44.3M	$25.3M	$8.0M	$32.2M	$31.4M	$332.2M	$326.5M	$488.5M	$606.8M	$857.3M	$1.1B	$1.7B	$1.9B	+6.2%
Net Margin	12.7%	14.4%	12.5%	7.2%	3.3%	0.8%	2.5%	2.1%	18.4%	15.1%	18.8%	18.2%	19.4%	21.6%	29.3%	27.3%	-2.0pp
Free Cash Flow	$99.6M	$129.2M	$161.8M	$133.5M	$164.4M	$245.2M	$278.5M	$459.1M	$585.9M	$715.8M	$957.8M	$1.2B	$1.4B	$1.7B	$1.9B	$2.2B	+18.4%
FCF Margin	30.7%	29.8%	30.3%	21.7%	21.3%	24.3%	21.8%	30.7%	32.5%	33.2%	36.9%	36.0%	32.8%	32.6%	31.6%	32.7%	+1.2pp
EPS (Diluted)	$0.26	$0.38	$0.40	$0.26	$0.15	$0.05	$0.18	$0.18	$1.91	$1.87	$2.91	$3.63	$1.06	$1.46	$2.26	$2.42	+7.1%

Total Debt$496.6M

Cash & Equiv.$2.5B

Net Cash$2.0B

4 min read

1. THE BIG PICTURE

Fortinet is successfully transitioning from a hardware-centric firewall vendor into a unified security platform, using its massive installed base as a Trojan horse for its "Security Fabric." By integrating proprietary ASIC chips with its own operating system, Fortinet delivers a performance-per-watt advantage that pure software rivals cannot easily match, allowing it to maintain the highest gross margins in its peer group.

2. WHERE THE RISKS HIT HARDEST

The "Security Fabric" platform strategy is threatened by the "best-of-breed" perception because customers may view all-in-one solutions as technically inferior to specialized point products from rivals like CrowdStrike (Risks, Business). Furthermore, Fortinet’s proprietary ASIC advantage is structurally vulnerable to supply chain concentration; Fortinet lacks long-term manufacturing contracts and relies on limited sources for the CPUs and memory chips essential to its hardware (Competitive Position). Finally, Fortinet’s financial predictability is at risk due to shipment concentration; because a substantial portion of billings occurs in the final two weeks of a quarter, any logistics failure or distributor distress could cause a high-profile earnings miss (Risks).

3. WHAT THE NUMBERS SAY TOGETHER

(XBRL) The data reveals a company with exceptional unit economics that the market treats with skepticism. Fortinet’s 81.2% gross margin is the highest among its peers, including pure-software firms like CrowdStrike (74.3%) and Datadog (79.8%). This suggests that its proprietary hardware is not a drag on profitability but a driver of it. While TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter revenue growth stands at 14.2%, the most recent quarter showed an acceleration to 15%, with product revenue specifically jumping 20% (Recent Results). This divergence suggests the "firewall refresh cycle" cited by management is gaining momentum, potentially reversing the broader deceleration seen in the TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter figures.

Supplemental signals reinforce this stability. Short interest is low at 2.8% of the float, and Fortinet is aggressively returning capital, ranking first among peers with a 3.6% buyback yield. With $1.0 billion in net cash and $2.2 billion in annual free cash flow, Fortinet is using its balance sheet to support the stock while it waits for its SASE and SecOps investments to scale.

4. IS IT WORTH IT AT THIS PRICE?

At a 25.4x Forward P/EP/EPrice-to-Earnings ratio — share price divided by annual earnings per share; how much investors pay per dollar of profit. Higher P/E = higher growth expectations, Fortinet trades at a 39% discount to the peer median of 41.6x (Peer Benchmarking). According to the (CAPM analysis), the current price implies the market is pricing in ~6.3% long-term growth. This appears to be a low bar: Fortinet’s actual TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter growth is more than double that rate (14.2%), and its FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders margin of 34.7% is the second-highest in the group. The valuation discount likely reflects investor fears that "all-in-one" platforms will lose out to specialized rivals, but Fortinet’s 20% product revenue growth in the most recent quarter challenges that narrative. If growth were to slow to a GDP-pace of 2.5%, the justified multiple would drop to 13.0x, representing nearly 50% downside; however, the current trajectory suggests the market-implied 6.3% is well within reach.

5. WHAT WOULD CHANGE THIS VIEW?

Cautious if service revenue guidance for 2026 ($5.05B–$5.15B) is missed, which would indicate that the firewall refresh cycle is failing to convert hardware customers into long-term software subscribers.
Constructive if non-GAAPGAAPGenerally Accepted Accounting Principles — the standard U.S. accounting rules all public companies must follow operating margins exceed the 36% high-end guidance for 2026, proving that the "FortiAI" framework is driving significant internal efficiency and reducing the cost of technical support.

6. BOTTOM LINE

Structural Advantage: Vertical integration of proprietary FortiASIC hardware with a unified FortiOS operating system, creating superior performance-per-dollar compared to software-only competitors.

Bottom Line: Fortinet is a highly profitable, cash-generative leader in a vital sector, currently priced as if its best growth days are over despite evidence of a new product upcycle.

Source: Synthesis · LLM Analysis

4 min read

1. Top 5 Material Risks

Channel Partner Concentration: A small number of distributors account for a large percentage of revenue and accounts receivable; specifically, six distributors represented 67% of total net accounts receivable as of December 31, 2025.
Quarter-End Shipment Concentration: Fortinet historically generates a substantial portion of billings and revenue in the final two weeks of each quarter, making Fortinet vulnerable to logistics delays, system failures, or order cancellations that could cause results to miss expectations.
Competitive Pressure: Larger competitors with broader product lines, such as Cisco, Palo Alto Networks, and Microsoft, can leverage their existing relationships to discourage customers from purchasing Fortinet products, potentially leading to price reductions and loss of market share.
Supply Chain and Component Shortages: Reliance on limited sources for key components—such as memory chips from Samsung or Micron and CPUs from Intel—exposes Fortinet to production delays, increased costs, and potential margin compression if price increases cannot be passed to customers.
Product Vulnerabilities: The discovery of critical vulnerabilities, such as the recent issue in the FortiManager product, can lead to reputational harm, litigation, and increased expenditure of financial and development resources to mitigate risks.

2. Company-Specific Risks

Real Estate Expansion: Fortinet is undertaking significant capital expenditures to acquire and develop data centers and office buildings, which exposes Fortinet to construction delays, budget overruns, and potential impairment charges if the need for physical space decreases.
Management Dependency: Fortinet’s future performance is heavily dependent on the continued service of co-founders Ken Xie and Michael Xie; the loss of either could significantly delay strategic objectives.
ASIC Dependency: Fortinet relies on proprietary ASICs manufactured by third-party foundries like TSMC or Renesas; because these foundries do not guarantee capacity, any supply disruption could halt production of key appliances.
Subscription Revenue Model: Because Fortinet recognizes revenue from FortiGuard and FortiCare services ratably over the contract term (typically one to five years), a decline in new or renewal sales in a single quarter will not be fully reflected in the income statement until future periods, masking the immediate impact of sales downturns.

3. Regulatory/Legal Risks

Data Privacy Compliance: Fortinet faces stringent requirements under the GDPR, CCPA, and other global privacy laws; non-compliance could result in heavy fines, data protection audits, and bans on the use of its services.
Government Contracting: Sales to government organizations are subject to complex procurement regulations and certification requirements (e.g., FedRAMP); failure to maintain these certifications or comply with government-specific contract terms can lead to debarment or loss of revenue.
Conflict Minerals: Under the Dodd-Frank Act, Fortinet must perform supply chain due diligence regarding conflict minerals; failure to meet these requirements or customer demands for "conflict-free" components could restrict Fortinet's ability to sell to certain end-customers.
Export Controls: Changes in international trade policies, economic sanctions, or export control laws could limit Fortinet’s ability to sell products in specific foreign markets, negatively impacting international revenue.

4. Financial Impact Map

Channel Partner Concentration → Accounts Receivable → Six distributors accounted for 67% of total net accounts receivable as of December 31, 2025.

Quarter-End Shipment Concentration → Revenue and Billings → A substantial portion of quarterly revenue is generated in the final two weeks; logistics or system delays can cause these to shift to future periods.

Competitive Pricing Pressure → Gross Margin → Increased competition and the need to offer promotional discounts or price reductions can lower gross profits and operating margins.

Supply Chain/Component Shortages → Cost of Goods Sold (COGS) → Shortages of memory chips and other components lead to increased procurement costs, which may compress margins if not offset by price increases.

Real Estate Investments → Capital Expenditures / Operating Expenses → Significant planned spending on data centers and office buildings may lead to impairment charges or accelerated depreciation if business needs change.

Source: 10-K Item 1A · LLM Analysis

Recent Filings

Form	Filed	Period
10-K	Feb 2026	Dec 2025
8-K	Feb 2026	—
10-Q	Nov 2025	Sep 2025
14A	Apr 2025	—