Fortinet, Inc. (FTNT)

Business

From the FY2025 Annual Report on Form 10-K (year ended December 31, 2025), accession 0001262039-26-000007.

Fortinet sells cybersecurity hardware, software and subscription services to enterprises, service providers and government organizations, and it makes money two ways: an up-front sale of an appliance or software license, and a multi-year stream of security subscriptions and technical support that is billed at the time of sale and recognized ratably. In 2025 that split was $2.22 billion of product revenue (33% of the total) against $4.58 billion of service revenue (67%), on $6.80 billion of total revenue and $1.85 billion of net income. Revenue is geographically diversified rather than concentrated: EMEA 42%, the Americas 40% and APAC 18% of 2025 revenue. End-customers sit in over 100 countries across financial services, retail, healthcare, manufacturing, government, education, telecommunications and operational technology (OT). The company is headquartered in Sunnyvale, California, was incorporated in Delaware in November 2000, and had 15,109 employees at December 31, 2025, roughly 30% in the United States, 20% in Canada and 50% elsewhere, principally EMEA.

The product is organised as a single integrated platform, the Fortinet Security Fabric, spanning three pillars:

• Secure Networking, the majority of product revenue. Network firewalls (FortiGate) deployed at branch, campus, data center, internal segmentation and private/public cloud, plus FortiSwitch ethernet switches, FortiAP wireless access points, FortiExtender 5G gateways and network access control for IoT.
• Unified SASE, a single-vendor secure access service edge combining firewall, SD-WAN, secure web gateway, cloud access security broker, data loss prevention, digital experience monitoring, remote browser isolation and zero-trust network access, delivered over a cloud network of more than 190 points of presence. A sovereign variant, FortiSASE Sovereign, runs the same capabilities inside infrastructure the customer controls. Cloud security (web application firewall, virtualised and cloud-native firewalls, cloud-native application protection, code security) sits here as well.
• AI-Driven Security Operations (SecOps), FortiAnalyzer as the central SOC platform with a unified data lake providing SIEM, SOAR, XDR and threat intelligence; FortiSIEM, FortiSOAR, FortiEndpoint, FortiNDR, FortiSandbox, FortiDeceptor, FortiDLP and FortiRecon; and managed offerings including SOC-as-a-Service, managed detection and response, security posture assessment and incident response.

Four proprietary technologies underpin the portfolio and are the company's stated differentiation. FortiOS is the single operating system across every form factor and edge. FortiASIC security processing units accelerate throughput, including inspection of encrypted traffic, at lower power and footprint than general-purpose silicon; Fortinet designs its own network processors, content processors and system-on-chip ASICs in-house. FortiCloud, powered by FortiStack, is the organically built private-cloud SaaS platform. FortiAI runs a dual-layer "AI for Security / Security for AI" framework: FortiAI-Assist applies generative and agentic AI to NOC and SOC workflows, while FortiAI-Protect and FortiAI-SecureAI defend against AI-driven threats and protect customers' own models, APIs and AI infrastructure. The portfolio runs to over 50 products. As of December 31, 2025 Fortinet held 1,064 U.S. patents and 1,405 patents globally, 321 of them AI-related.

Recurring revenue comes from two service lines. FortiGuard and other security subscriptions are AI-powered content, application, device, web and NOC/SOC security services fed by FortiGuard Labs, the in-house threat-intelligence organisation that mines millions of global network sensors. FortiCare technical support is sold in Essential, Premium and Elite tiers (Elite targets a 15-minute response on key product families), with account-level Advanced Support in Core, Pro and Pro Plus options. Typical contractual support and subscription terms run one to five years, which is why deferred revenue ($7.12 billion at December 31, 2025) is roughly the size of a year's revenue.

Route to market. Substantially all revenue flows through a two-tier channel: Fortinet sells to distributors, who sell to resellers, service providers and managed security service providers, who sell to end-customers. Direct sales are the exception, reserved for large service providers, major systems integrators and large end users. Named distributors include Arrow Electronics, Exclusive, Ingram Micro and TD Synnex. The concentration is real, six distributors buying directly accounted for 67% of net accounts receivable at December 31, 2025 (69% a year earlier), one of them alone for 32%. Standard payment terms are generally no more than 60 days. Cloud-delivered offerings are hosted in Fortinet's own data centers and points of presence, in colocation facilities, and on Amazon Web Services, Microsoft Azure and Google Cloud.

Manufacturing. Appliance manufacturing is outsourced to contract and original design manufacturers including Accton, IBASE, Micro-Star, Senao and Wistron; approximately 87% of hardware is manufactured in Taiwan. Finished goods route through company warehouses in California and the Netherlands or a logistics partner in Taoyuan City, Taiwan. The proprietary ASICs are built by contract manufacturers including Toshiba America and Renesas, using foundries in Taiwan and Japan operated by TSMC or by the manufacturer itself. Fortinet has no long-term contracts guaranteeing capacity or pricing for ASICs or other components, and several key components, CPUs from Intel and AMD, network and wireless chips from Broadcom, Marvell, Qualcomm and Intel, memory from Intel, Micron, ADATA, Toshiba, Samsung and Western Digital, come from limited or sole sources. Research and development is conducted primarily in the United States and Canada; the company states it performs no source-code development or internal R&D in Russia or China and owns no manufacturing or R&D activities in China. A Trusted Supplier Program built to NIST SP 800-161 governs supplier qualification.

Competition. Named competitors are Check Point, Cisco, CrowdStrike, F5 Networks, Hewlett-Packard Enterprise, Huawei, Microsoft, Netskope, Palo Alto Networks, SonicWALL, Sophos and Zscaler. Fortinet acknowledges several are significantly larger with greater financial, technical, marketing and support resources and better brand recognition, and that some can bundle security functionality into products customers already buy. It competes on security performance, throughput, breadth, integration and price/total cost of ownership.

Strategic thesis. Management's argument is that network complexity, many edges, mixed cloud and on-premises, a cybersecurity skills shortage and siloed point products, pushes buyers toward consolidation on one integrated platform, and that demand for secure networking will overtake the pure networking market by 2030. It expects a significant firewall refresh and upgrade cycle in coming years and frames that cycle as the lever for expanding into LAN, SD-WAN, SASE, cloud-native application protection and SecOps inside accounts it already holds. Fortinet has never declared or paid a cash dividend and does not anticipate doing so.

Risk factors

From the FY2025 Form 10-K, accession 0001262039-26-000007, and the Form 10-Q for the quarter ended June 30, 2026, accession 0001262039-26-000021 (litigation and capital expenditure guidance).

Component supply, and memory chips specifically. Key components come from limited or sole sources, Fortinet holds no long-term capacity or pricing contracts, and individual product lines are generally built by only one manufacturing partner. The company discloses a live, named constraint: as a result of the global build-out of AI infrastructure, there is a worldwide shortage of memory chips used in certain Fortinet products, and Fortinet says it is currently experiencing and may continue to experience constraints on memory chip availability. Higher memory costs are already visible in reported product cost of revenue. Purchase commitments cut the other way, during prior disruption Fortinet raised order commitments and may be required to accept or pay for components regardless of the sales level in a period. Non-cancelable inventory purchase commitments stood at $1.67 billion at June 30, 2026, up $856.5 million from $810.6 million at December 31, 2025.

Geographic and geopolitical concentration. Roughly 87% of hardware is manufactured in Taiwan and ASIC foundries sit in Taiwan and Japan, so tensions between China and Taiwan, a typhoon, or a trade action are direct operating risks rather than abstractions. Tariffs, trade disputes and potential retaliatory tariffs are named. The 10-K also discloses that the Chinese government recently instructed domestic companies in certain industries not to use cybersecurity products made by U.S.- or Israel-based companies, Fortinet among them.

Product vulnerabilities. This is the structural risk of the business: the products are complex, have contained and may contain defects and vulnerabilities, and a security vendor whose own product is exploited suffers reputational damage out of proportion to the technical fault. The 10-K cites a critical vulnerability discovered in FortiManager for which an advisory and patch were released, and names the consequent exposure, reputational harm, damaged customer relationships, potential litigation and additional regulatory scrutiny. Fortinet also discloses that unauthorized parties have targeted the company directly, stealing technical data and attempting to steal private encryption keys in order to impersonate its products and threat-intelligence update services, and have targeted critical vulnerabilities in its product software and infrastructure. Because it sells network security, a breach of Fortinet's own networks would do more harm than the same breach at another company.

Channel and distributor concentration. Substantially all revenue comes through third-party channel partners who have no minimum purchase requirements, many of whom are privately held and whose financial condition Fortinet cannot fully assess. Six direct-buying distributors represented 67% of net accounts receivable at December 31, 2025; one represented 32%. In the second quarter of 2026, three distributors accounted for 27%, 15% and 11% of revenue. Loss, failure or credit distress at one of them would hit both revenue and collections. Fortinet also grants retroactive price protection to certain major North American distributors, so a list-price reduction generates credits against inventory those distributors already hold.

Quarter-end shipment concentration. A substantial portion of each quarter's orders, billings and revenue lands in the final two weeks, with the last shipment typically collected by a logistics partner hours before the quarter closes. A power outage, a late pick-up, or a cyberattack at a channel partner in that window can move a material amount of revenue out of the period.

Growth and margin durability. Billings, revenue and free cash flow growth may slow and operating margins may decline if demand, renewal rates, pricing, competitive dynamics, implementation timing or cost structure move against the company. Backlog fluctuates quarter to quarter and its conversion affects the shape of billings and revenue in any single period. Because subscription and support revenue is recognised over the service term, a downturn in service sales is not reflected in full in results when it happens, the deferred revenue balance masks it for several quarters, and the same lag delays the benefit of an upturn.

Competition and platform substitution. Large networking incumbents such as Cisco can fold security features into infrastructure customers already deploy, and specialised point-product vendors can reach market faster on a single threat class. There is also a standing market-perception risk that a multi-function product from one vendor is inferior to best-of-breed point products.

Real estate and capital intensity. Fortinet owns rather than leases where it judges ownership better aligned to strategy, and is expanding data centers, points of presence, offices and warehouses. Construction, acquisition and development carry cost, delay, contractor-failure, environmental-liability and insurance-gap risk, and 2026 capital expenditure is guided to approximately $350–$550 million.

Key-person dependence. Performance is tied to senior management, specifically co-founder, Chairman and CEO Ken Xie and co-founder, President and CTO Michael Xie.

Securities and derivative litigation. Two securities class actions were filed in the Northern District of California, Oklahoma Firefighters Pension and Retirement System v. Fortinet, Inc. (September 22, 2025) and State of Rhode Island Office of the General Treasurer v. Fortinet, Inc. (October 16, 2025), on behalf of an alleged class who acquired shares from November 8, 2024 through August 6, 2025, alleging false or misleading statements about the business including regarding the 2026 firewall refresh cycle. They were consolidated as In re Fortinet, Inc. Securities Litigation; a consolidated amended complaint filed April 24, 2026 asserts claims against the CEO, CTO, current and former CFOs and adds a claim against the head of investor relations. Defendants moved to dismiss on June 15, 2026. Four stockholder derivative complaints filed between October 8 and December 2, 2025 were consolidated as In re Fortinet, Inc. Stockholder Derivative Litigation and stayed on April 2, 2026 pending resolution of the class action. Fortinet says the class action is without merit and intends to defend vigorously; no loss accrual was recorded as of June 30, 2026 for either matter. Separately, a jury returned a verdict fully in Fortinet's favour against Alorica Inc. on October 4, 2024; Alorica has appealed.

Debt, tax and currency. Fortinet has incurred indebtedness and may incur more; rating-agency actions affect the value and liquidity of its debt and equity and the terms of future financing. The effective tax rate is exposed to changes in U.S. and international tax legislation and to the mix of jurisdictions. Sales contracts are primarily denominated in U.S. dollars so revenue is largely insulated from translation, but a substantial share of operating expenses is incurred abroad, chiefly in Canadian dollars, euros, sterling and yen, and hedging is short-dated and focused on the Canadian dollar. A 10% move in exchange rates would have changed the value of foreign-currency cash balances by $17.2 million at December 31, 2025.

Buyback-related volatility and takeover defences. The 10-K names share repurchases themselves as a possible amplifier of stock-price volatility and a possible non-optimal use of capital, and notes that charter, bylaw and Delaware-law provisions could deter a change of control and deny stockholders a premium.

Management's discussion, fiscal year 2025

From the FY2025 Form 10-K, accession 0001262039-26-000007.

Revenue. Total revenue rose $843.8 million, or 14%, to $6,799.6 million. Product revenue rose $309.7 million, or 16%, to $2,218.4 million, driven by growth across hardware and software licensing and specifically by secure networking hardware and term licenses. Service revenue rose $534.1 million, or 13%, to $4,581.2 million, of which security subscription revenue contributed $316.5 million (+14%) and technical support and other services $217.6 million (+13%), reflecting recognition from a growing deferred revenue balance plus growth in SaaS including unified SASE and SecOps. By region: EMEA $2,834.3 million (+18%), Americas $2,700.4 million (+11%), APAC $1,264.9 million (+13%), EMEA contributed the largest share of the increase in both dollars and percentage terms. Billings were geographically dispersed: seven countries made up about 50%, the rest coming from over 100 countries each contributing under 3%. Of service revenue recognised in 2025, 71% sat in the December 31, 2024 deferred revenue balance (2024: 70%).

Gross margin. Total gross margin was essentially flat at 80.5% versus 80.6%, with mix shifting 0.6 percentage points from service to product. Product gross margin improved 1.5 points to 67.3% as inventory-related reserve expense normalised from elevated 2024 levels. Service gross margin fell 0.7 points to 86.8% on higher cloud service costs, partly offset by service revenue outgrowing labour, replacement and repair costs.

Operating expenses and margin. Total operating expenses rose $391.2 million, or 13%, to $3,386.0 million, holding at 50% of revenue. R&D rose $98.7 million (+14%) to $815.5 million, $71.8 million of it personnel and $31.4 million non-personnel product development. Sales and marketing rose $302.7 million (+15%) to $2,347.5 million, $226.4 million personnel plus $35.5 million marketing programs, $10.2 million travel and $6.0 million cloud hosting for sales demonstrations. General and administrative fell $4.4 million (–2%) to $233.4 million on lower legal and professional fees. Operating expenses as a percentage of revenue declined 0.5 points because revenue growth outpaced personnel-cost growth; headcount rose 7% to 15,109 from 14,138. Operating income was $2.08 billion, up $281.3 million, or 16%, from $1.80 billion, for a 30.7% operating margin versus 30.3%, the 0.4-point gain coming from a 0.6-point drop in G&A as a percentage of revenue, partly offset by 0.2 points of higher sales and marketing and 0.1 point of gross margin.

Below the line. Interest income rose $7.1 million to $162.3 million on higher average investment balances; interest expense was flat at $20.1 million. Other income, net fell $64.6 million to $55.3 million, principally because the bargain-purchase gain dropped $66.4 million, $39.9 million on the Linksys acquisition in Q1 2025 versus $106.3 million on Lacework in Q3 2024, plus a $15.7 million smaller gain on marketable equity securities, partly offset by $12.0 million lower FX losses and $5.7 million more net rental income. Gain (loss) from equity method investments swung $39.7 million to a $10.3 million gain, driven by Linksys: a $10.8 million gain on acquisition in 2025 against a $21.0 million loss in 2024 that included an $8.0 million other-than-temporary impairment.

Taxes. The provision rose $155.2 million (+55%) to $439.1 million and the effective rate rose to 19% from 14%. The 2025 provision comprised $599.7 million of U.S. federal, state, foreign and withholding tax and unrecognized benefits, offset by $60.9 million of excess stock-compensation benefits, an $84.3 million FDII benefit and $15.4 million of federal R&D credits. The One Big Beautiful Bill Act, enacted July 4, 2025, made permanent immediate expensing of U.S. R&D and certain assets and modified the international framework; it cut Fortinet's 2025 income tax liability by $120.0 million while raising the GAAP effective rate by one percentage point.

Cash and capital allocation. Operating cash flow was $2,590.6 million, up $332.5 million (+15%), helped by a $754.2 million increase in deferred revenue and offset by a $449.0 million increase in deferred contract costs (mostly sales commissions), $215.9 million more receivables, $95.9 million more prepaids, $90.6 million more inventory, $66.2 million less deferred tax assets, and increases of $55.0 million in accrued payroll and $27.9 million in payables. Investing used $599.1 million, $364.8 million of property and equipment, $192.8 million of net investment purchases and $41.6 million for business combinations net of cash. Financing used $2,371.5 million, dominated by $2.29 billion of buybacks plus $81.6 million of net share-settlement tax withholding. In August 2025 the board added $1.0 billion to the repurchase authorisation and extended it to February 28, 2027, taking the cumulative authorisation to $9.25 billion; Fortinet repurchased 28.7 million shares for $2.29 billion during 2025, leaving $738.6 million available at year end. Cash, cash equivalents and investments ended the year at $3,922.2 million, down $144.3 million, with working capital of $866.2 million; $266.9 million was held by international subsidiaries. Billings (non-GAAP, defined as revenue plus the change in deferred revenue less deferred revenue acquired in business combinations) were $7,553.7 million versus $6,532.5 million; free cash flow (non-GAAP) was $2,211.8 million versus $1,879.2 million.

Seasonality. Quarterly results show year-end buying that lifts fourth-quarter billings and product revenue, a sequentially weaker first quarter, then increases through the second and third quarters.

Management's own 2026 outlook as given in the 10-K. Product and service revenue were both expected to keep growing. Total gross margin depends on mix; product gross margin could decline if price increases implemented to offset higher hardware component costs are not accepted by the market or do not arrive in time, while service gross margin was expected to hold roughly steady despite data center, colocation and cloud capacity expansion. Notably, in the 10-K management expected full-year 2026 operating margin to decrease versus 2025, with expenses outpacing revenue growth on sales and marketing headcount, product development and continued data center and real estate capital spending. Capital expenditure was guided to $350–$450 million. Fortinet expected to repay the 2026 Senior Notes at their March 15, 2026 maturity.

Current quarter, three and six months ended June 30, 2026

From the Form 10-Q for the quarterly period ended June 30, 2026, accession 0001262039-26-000021, except guidance as noted.

The quarter was a material acceleration, and the acceleration came from hardware.

Revenue. Total revenue was $2,047.9 million, up $417.9 million or 26% year over year; six-month revenue was $3,897.5 million, up 23%. Product revenue was $773.0 million for the quarter, up $264.1 million or 52%, and $1,418.1 million for the half, up 46%. Management attributes this to higher unit shipments, higher average selling prices as customers bought higher-performing models, and recent pricing actions, with growth in secure networking hardware and term licenses tied to demand for higher-performance products, deployments related to AI infrastructure, technology upgrades, upsell and new use cases. Service revenue was $1,274.9 million, up $153.8 million or 14% (security subscriptions +$85.3 million or 13%; technical support and other +$68.5 million or 14%); six-month service revenue was $2,479.4 million, up 13%. The mix shifted sharply: product moved from 31% to 38% of revenue in the quarter. By region for the quarter, EMEA was $871.7 million (+31%, 43% of revenue), the Americas $808.2 million (+23%, 39%) and APAC $368.0 million (+21%, 18%), EMEA again the largest contributor to the increase in both dollars and percentage. Of service revenue recognised in the quarter, 90% was in the March 31, 2026 deferred revenue balance.

Margins. Total gross margin fell 0.5 points to 80.2% (half-year 80.3% versus 80.8%), entirely a mix effect, with 6.5 points of revenue mix moving from service to lower-margin product. Underneath that, product gross margin actually rose 2.4 points to 69.8%, as pricing actions more than offset the shift toward hardware and increased costs of memory chips. Service gross margin was down 0.1 point to 86.6% on data center and cloud expansion.

Operating leverage. Operating expenses were $953.9 million, up 11%, but fell from 53% to 47% of revenue, a 6.0-point improvement. R&D was $225.0 million (+7%, +$15.5 million, mostly personnel), sales and marketing $669.1 million (+13%, +$77.1 million, $73.4 million of it personnel), G&A $61.1 million (+7%). Operating income was $689.3 million, up $231.3 million or 51%, for a 33.7% operating margin against 28.1%, a 5.6-point expansion. For the half, operating income was $1.27 billion (+39%) at a 32.6% margin versus 28.8%. Interest income fell $11.8 million to $33.2 million on lower rates and lower average cash after buybacks and debt repayment; interest expense fell $1.4 million to $3.2 million; other income, net fell $18.0 million to $0.9 million. The effective tax rate was 16% versus 15%, helped by a $33.9 million FDDEI benefit and $17.7 million of excess stock-compensation benefits. Net income was $606.3 million for the quarter and $1,140.8 million for the half, against $440.1 million and $873.5 million a year earlier.

Balance sheet and cash. Cash, cash equivalents and investments were $4,468.7 million at June 30, 2026, up from $3,922.2 million at year end, with working capital of $1,367.5 million (from $866.2 million). Deferred revenue was $7,675.7 million (short-term $3,841.8 million) versus $6,567.6 million a year earlier. Quarterly billings (non-GAAP) were $2,372.1 million against $1,778.4 million. Six-month operating cash flow was $2,120.7 million, up $805.5 million or 61%; quarterly operating cash flow was $1,043.6 million against $451.9 million, and quarterly free cash flow (non-GAAP) $965.6 million against $284.1 million, helped by capital expenditure of only $78.0 million in the quarter versus $167.8 million. Six-month investing used $190.3 million and financing used $1,490.8 million. Accounts receivable fell to $1,455.6 million from $1,691.2 million at year end; inventory rose to $426.3 million from $399.5 million. Goodwill was unchanged at $257.4 million.

Debt. Fortinet repaid the full $500.0 million principal of its 1.0% 2026 Senior Notes at their March 15, 2026 maturity. Remaining long-term debt is the 2031 Senior Notes, $500.0 million principal at a 2.2% coupon, carried at $496.9 million net of discount and issuance costs, with an estimated fair value of about $449.5 million including accrued interest. There are no financial covenants, and the company says it does not currently intend to retire the Senior Notes early.

Buybacks. In January 2026 the board added another $1.0 billion to the repurchase authorisation, lifting the cumulative amount to $10.25 billion through February 28, 2027. Fortinet repurchased 12.5 million shares for $972.8 million in the first half at a weighted-average $77.73 (excluding a $6.7 million excise-tax accrual), leaving $765.8 million available at June 30, 2026. Repurchase activity was concentrated early: 1.9 million shares at an average $77.95 in April 2026, and none in May or June. Shares outstanding fell to 733.6 million from 743.0 million at year end.

Commitments and capital spending. Non-cancelable inventory purchase commitments more than doubled to $1.67 billion (from $810.6 million at year end), which management attributes to demand growth, product lead times and rising component cost; $1,337.5 million falls due in 2026 and $329.6 million thereafter. The excess-commitment liability was $24.0 million. Other non-cancelable contractual commitments beyond one year were $110.9 million, plus $64.5 million of operating lease payments. Full-year 2026 capital expenditure guidance was raised to approximately $350–$550 million from the $350–$450 million range given in the 10-K.

The outlook changed direction. In the 10-K, management expected full-year 2026 operating margin to decrease versus 2025. In this 10-Q, management expects full-year 2026 operating margin to increase slightly versus 2025, benefiting from operating leverage and measured investments, while still expecting product gross margin to decline for the full year on higher hardware component costs, and service gross margin to decline slightly.

Guidance. In its second-quarter results announcement of July 29, 2026 (Form 8-K, accession 0001262039-26-000018), Fortinet raised full-year 2026 revenue guidance to a range of $8.020–$8.180 billion, with service revenue of $5.180–$5.220 billion, billings of $9.350–$9.550 billion, non-GAAP gross margin of 79.0–81.0%, non-GAAP operating margin of 35.0–37.0% and diluted non-GAAP EPS of $3.41–$3.47 on a 741–745 million diluted share count and an 18% non-GAAP tax rate. Third-quarter 2026 guidance was revenue of $2.010–$2.100 billion, billings of $2.250–$2.350 billion, the same gross and operating margin ranges, and diluted non-GAAP EPS of $0.83–$0.87.

Insider trading plans. John Whittle, Chief Operating Officer, adopted a Rule 10b5-1 stock sale plan on June 5, 2026, and Christiane Ohlgart, Chief Financial Officer, adopted one on June 10, 2026.

Subsequent events

Fortinet's Form 10-Q for the quarter ended June 30, 2026 (accession 0001262039-26-000021) contains no subsequent-events note, the notes to the condensed consolidated financial statements end with segment information, and the company disclosed no post-period acquisition, divestiture, financing, borrowing or litigation outcome in that filing. The post-period items below come from the body of the 10-Q and from the second-quarter results release.

Two post-period items are on record. The first is a rating-agency action: in July 2026 Moody's upgraded certain of Fortinet's credit ratings to A3 from Baa1 and changed the outlook to Stable from Positive, while the company's S&P ratings remain BBB+ with a Stable outlook. Fortinet says its investment-grade credit ratings support its continued financial flexibility and access to the capital markets. The upgrade is disclosed in the liquidity discussion of the 10-Q and repeated as a business highlight in the July 29, 2026 results release (Form 8-K, accession 0001262039-26-000018), which identifies it as an upgrade of the senior unsecured notes rating.

The second is the second-quarter results announcement itself, issued July 29, 2026 and furnished on Form 8-K, accession 0001262039-26-000018, in which Fortinet raised its full-year 2026 outlook (detailed above). In the same release the company announced a strategic collaboration with Intel to develop the Fortinet Security Processor 6 (SP6), pairing Fortinet's security-processor design with Intel's design, packaging and manufacturing capability, which the company frames as strengthening the resilience and diversity of its supply chain; launched the FortiGate 1200G series with FortiSASE Outpost and FortiSOC, a cloud-delivered security operations platform; and described partnerships with Anthropic, OpenAI and NVIDIA on AI security initiatives. The release does not date these items individually, so they are not necessarily post-quarter events. No purchase price or deal terms were disclosed for the Intel collaboration, and it is described as a development collaboration rather than an acquisition.

For completeness on the annual report: the FY2025 Form 10-K (accession 0001262039-26-000007) disclosed, as events after its December 31, 2025 year end, the January 2026 board approval of a $1.0 billion increase in the repurchase authorisation to $10.25 billion through February 28, 2027; the repurchase of 6.1 million shares at an average $76.68 for $470.5 million between year end and the filing date, leaving approximately $1.27 billion available at that time; and a definitive agreement signed in January 2026 to purchase approximately 5.3 acres of real property in Sunnyvale, California for $47.0 million in cash, excluding acquisition costs. All three fall inside the period covered by the June 30, 2026 Form 10-Q, and the 10-Q does record real-property purchases inside that window, though it does not identify them: during the six months ended June 30, 2026 Fortinet purchased real estate in the United States totaling $62.1 million, to be used for future development to expand data center and office space. Those purchases were accounted for under the asset acquisition method, with $59.5 million allocated to land and $2.6 million to buildings and improvements on relative fair values, and land on the balance sheet rose to $649.0 million from $592.4 million over the same six months. The six-month total is larger than the Sunnyvale parcel's price, so the 10-Q neither confirms nor excludes that parcel.

There were no business combinations, divestitures or acquired deferred revenue balances in the six months ended June 30, 2026. The business combinations note in the 10-Q describes only 2025 transactions: the January 31, 2025 purchase of the remaining Series A Preferred Stock of Linksys Holdings, Inc. for $20.8 million in cash, taking Fortinet from a 50.8% interest (acquired for $160.0 million in 2021) to 100% ownership and producing a bargain-purchase gain, and other 2025 acquisitions for total consideration of $38.3 million in cash with $21.9 million of goodwill recorded.

Filings that contain financial statements

The following Form 8-K filings furnish Exhibit 99.1 earnings press releases containing full condensed consolidated balance sheets, statements of income, statements of cash flows, and GAAP-to-non-GAAP reconciliations:

• Accession 0001262039-26-000018 (filed July 29, 2026), second quarter and six months ended June 30, 2026, with comparative prior-year periods.
• Accession 0001262039-26-000010 (filed May 6, 2026), first quarter ended March 31, 2026, with comparative prior-year period.
• Accession 0001262039-26-000003 (filed February 5, 2026), fourth quarter and full year ended December 31, 2025, with comparative prior-year periods.
• Accession 0001262039-25-000036 (filed November 5, 2025), third quarter and nine months ended September 30, 2025, with comparative prior-year periods.
• Accession 0001262039-25-000025 (filed August 6, 2025), second quarter ended June 30, 2025, with comparative prior-year period.
• Accession 0001262039-25-000014 (filed May 7, 2025), first quarter ended March 31, 2025, with comparative prior-year period.
• Accession 0001262039-25-000007 (filed February 6, 2025), fourth quarter and full year ended December 31, 2024, with comparative prior-year periods.
• Accession 0001262039-24-000040 (filed November 7, 2024), third quarter ended September 30, 2024, with comparative prior-year period.
• Accession 0001262039-24-000034 (Form 8-K/A, filed August 7, 2024, reporting the August 6, 2024 event), corrected version of the second-quarter 2024 press release, solely to fix a clerical error in third-quarter and full-year 2024 non-GAAP diluted EPS guidance; the underlying financial statements were not restated.

Earnings and guidance

Second quarter 2026 (reported July 29, 2026; accession 0001262039-26-000018). Revenue grew 26% year over year to $2.05 billion, with product revenue up 52% to $773 million. Billings grew 33% to $2.37 billion. GAAP operating margin was 34% and non-GAAP operating margin was 38%. GAAP diluted EPS grew 44% to $0.82 and non-GAAP diluted EPS grew 41% to $0.90. Operating cash flow was $1.04 billion and free cash flow was $966 million. Fortinet raised full-year 2026 guidance to approximately 19% year-over-year revenue growth, guiding to third-quarter revenue of $2.010–$2.100 billion and full-year revenue of $8.020–$8.180 billion. The same release announced a strategic collaboration with Intel to develop the Fortinet Security Processor 6 (SP6), combining Fortinet's purpose-built security processor expertise with Intel's design, development, packaging and manufacturing capabilities; the launch of the FortiGate 1200G series with FortiSASE Outpost, targeted at sovereignty, performance and AI infrastructure requirements; and AI partnerships with Anthropic, OpenAI and NVIDIA. The release also disclosed that Moody's upgraded Fortinet's senior unsecured notes rating to A3 from Baa1.

First quarter 2026 (reported May 6, 2026; accession 0001262039-26-000010). Revenue grew 20% year over year to $1.85 billion; product revenue grew 41% to $645 million. Billings grew 31% to $2.09 billion. GAAP operating margin was 31% and non-GAAP operating margin was 36%. GAAP diluted EPS grew 29% to $0.72 and non-GAAP diluted EPS grew 41% to $0.82. Operating cash flow and free cash flow both reached quarterly records of $1.08 billion and $1.01 billion, respectively. Fortinet raised full-year 2026 revenue guidance to approximately 15% growth.

Fourth quarter and full year 2025 (reported February 5, 2026; accession 0001262039-26-000003). Fourth-quarter revenue grew 15% to $1.91 billion; full-year revenue grew 14% to $6.80 billion. Full-year billings grew 16% to $7.55 billion and free cash flow was $2.21 billion. Full-year GAAP operating margin was 31% and non-GAAP operating margin was 35%. The company said it exceeded its "Rule of 45" benchmark for the sixth consecutive year. In January 2026, Fortinet's board of directors had approved a $1.0 billion increase to the share repurchase program, bringing the aggregate authorization to $10.25 billion through February 28, 2027; the February 5, 2026 release announced the increase, noting about $1.38 billion remained available as of February 4, 2026.

Third quarter 2025 (reported November 5, 2025; accession 0001262039-25-000036). Revenue grew 14% year over year to $1.72 billion; product revenue grew 18% to $559.3 million. Billings grew 14% to $1.81 billion. GAAP operating margin reached a third-quarter record of 32% and non-GAAP operating margin reached a record 37%.

Second quarter 2025 (reported August 6, 2025; accession 0001262039-25-000025). Revenue grew 14% year over year to $1.63 billion; product revenue grew 12% to $508.9 million. Billings grew 15% to $1.78 billion. GAAP operating margin was 28% and non-GAAP operating margin was 33%. Fortinet raised its full-year 2025 billings guidance midpoint by $100 million.

First quarter 2025 (reported May 7, 2025; accession 0001262039-25-000014). Revenue grew 14% year over year to $1.54 billion; product revenue grew 12% to $459.1 million. Billings grew 14% to $1.60 billion. GAAP operating margin was a first-quarter record of 29% and non-GAAP operating margin was a first-quarter record of 34%.

Fourth quarter and full year 2024 (reported February 6, 2025; accession 0001262039-25-000007). Fourth-quarter revenue grew 17% to $1.66 billion, with product revenue up 18% to $574.0 million; full-year revenue grew 12% to $5.96 billion. Fourth-quarter billings were $2.00 billion, up 7% year over year, and full-year billings were $6.53 billion, up 2%. Fourth-quarter GAAP operating margin was a record 35% and non-GAAP operating margin was a record 39%; full-year GAAP operating margin was 30% and non-GAAP operating margin was 35%. The company said it exceeded its "Rule of 45" benchmark for the fifth consecutive year. Guidance for the first quarter of 2025 called for revenue of $1.500–$1.560 billion.

Third quarter 2024 (reported November 7, 2024; accession 0001262039-24-000040). Revenue grew 13% year over year to $1.51 billion; service revenue grew 19%, while billings grew 6% to $1.58 billion and product revenue was $473.9 million, up 2% from $465.9 million. GAAP operating margin was a record 31.2% and non-GAAP operating margin was a record 36.1%. Fortinet raised its 2024 revenue and non-GAAP operating margin guidance and disclosed that its board had increased the share repurchase authorization by $1 billion in October 2024, leaving approximately $2.03 billion available as of the release date.

Second quarter 2024 guidance correction (August 6, 2024; accession 0001262039-24-000034, Form 8-K/A). Fortinet amended its original second-quarter 2024 Form 8-K solely to correct a clerical error in its diluted non-GAAP EPS guidance, restating expected diluted non-GAAP EPS to $0.50–$0.52 for the third quarter of 2024 and $2.00–$2.04 for full-year 2024. No other changes were made to the original filing or press release.

Capital return

August 21, 2025 (accession 0001262039-25-000033). Fortinet's board increased the share repurchase authorization by $1 billion, to an aggregate of up to $9.25 billion, and extended the program's expiration from February 28, 2026 to February 28, 2027. Approximately $1.23 billion remained available under the program as of that date. (This authorization was subsequently increased again to $10.25 billion in connection with the February 2026 fourth-quarter earnings release, described above.)

Board and management changes

May 13, 2025 (accession 0001262039-25-000020, Form 8-K/A). The board appointed Christiane Ohlgart as Chief Financial Officer, effective upon the retirement of Keith Jensen, with an annual base salary of $480,000, an 80% target bonus, and equity awards with target values of $500,000 in RSUs and $500,000 in performance stock units.

February 4, 2025 (accession 0001262039-25-000007). Chief Financial Officer Keith Jensen notified the company of his intention to retire effective May 15, 2025, after approximately 11 years at Fortinet. The board named Christiane Ohlgart, then Chief Accounting Officer, to succeed him as CFO effective upon the retirement; she remained Principal Accounting Officer.

November 6, 2024 (accession 0001262039-24-000045; amended January 17, 2025 under accession 0001262039-25-000003). The board expanded from nine to ten directors and appointed Janet Napolitano, former U.S. Secretary of Homeland Security and former Arizona governor, to fill the new seat, effective November 7, 2024. On January 17, 2025 the board appointed Ms. Napolitano to its Cybersecurity Committee.

Annual meetings

June 12, 2026 (accession 0001262039-26-000015). Stockholders re-elected all nine director nominees, ratified Deloitte & Touche LLP as independent auditor for fiscal 2026, and approved, on an advisory basis, executive compensation.

June 13, 2025 (accession 0001262039-25-000022). Stockholders re-elected all nine director nominees, ratified Deloitte & Touche LLP as independent auditor for fiscal 2025, approved executive compensation on an advisory basis, and rejected a stockholder proposal to split the Chairman and CEO roles.

Not reflected in these filings

No M&A signing or closing, debt issuance, dividend initiation, restructuring, impairment, or legal/regulatory outcome disclosures appear among the Form 8-K filings reviewed for this period. Fortinet's periodic 10-K and 10-Q filings disclose routine business-combination payments (cash paid in connection with acquisitions appears in the cash-flow statements above), but no acquisition was announced or closed via a standalone Form 8-K in the period covered.

About this file

FTNT annual income statement, balance sheet and cash flow

Taken from the SEC filings and normalized to actual dollars.

FTNT quarterly income statement, balance sheet and cash flow

Taken from the SEC filings and normalized to actual dollars.

FTNT year-to-date income statement and cash flow

Taken from the SEC filings and normalized to actual dollars.

FTNT trailing twelve month income statement and cash flow

Derived by AI from the figures the filings report. No filing prints these, so none of them is linked.

• Derivation. fiscal year 2025 plus the six months ended June 30, 2026 less the six months ended June 30, 2025

Adjustments

Notes

• Fortinet is a cybersecurity vendor selling network security appliances (product revenue) together with security subscriptions and technical support (service revenue), so this record uses the standard revenue / cost of revenue / gross profit / operating income template. Fortinet states in both filings that it has one operating and reportable segment, so there is no segment split to report; the product/service and geographic breakdowns given here are the disaggregations the filings themselves present.
• Fiscal years 2025, 2024 and 2023 come from the FY2025 Form 10-K (accession 0001262039-26-000007). That 10-K's statements of income and statements of cash flows present three years, but its balance sheets present only December 31, 2025 and December 31, 2024, so fiscal 2023 carries no balance sheet in this record.
• The quarter ended June 30, 2026 and the year-ago quarter ended June 30, 2025 come from the Form 10-Q for the quarter ended June 30, 2026 (accession 0001262039-26-000021), which prints both three-month columns side by side. That 10-Q's balance sheets show only June 30, 2026 and December 31, 2025, so the year-ago quarter carries no balance sheet here.
• Three-month cash flow figures are not in the 10-Q: its statements of cash flows cover only the six months ended June 30, 2026 and June 30, 2025. Operating cash flow, capital expenditures, free cash flow and the investing and financing totals for each three-month period are therefore taken from Fortinet's second-quarter 2026 earnings release, Exhibit 99.1 to the Form 8-K filed July 29, 2026 (accession 0001262039-26-000018), which prints a three-month reconciliation of net cash provided by operating activities to free cash flow. The release's six-month cash flow statement agrees line for line with the 10-Q's.
• Sign conventions: capital expenditures (Fortinet's "purchases of property and equipment") and share repurchases are stored as positive outflow amounts, so that free cash flow equals operating cash flow less capital expenditures. Net cash used in investing and in financing activities keeps the negative sign the filings print. "Gain on intellectual property matters" is presented by Fortinet as a credit inside operating expenses and is carried here with the negative sign the filings print.
• Total debt is the current portion of long-term debt plus long-term debt. That is $996.3 million at December 31, 2025 ($499.7 million current plus $496.6 million long-term) and $994.3 million at December 31, 2024. The 10-Q's statements of cash flows show a $500.0 million repayment of senior notes in the six months ended June 30, 2026, and at June 30, 2026 there is no current portion, leaving $496.9 million outstanding.
• Fortinet paid no dividends in any period presented - the statements of cash flows in both filings show no dividend line in financing activities - so dividends paid is zero throughout.
• The year-to-date block is the six months ended June 30, 2026, with the six months ended June 30, 2025 held as a comparative inside it. The trailing-twelve-month block is derived arithmetically as fiscal 2025 plus the six months ended June 30, 2026 less the six months ended June 30, 2025; it is not a figure Fortinet publishes. No per-share amounts or share counts are shown for that view, because weighted-average share counts cannot be added across periods.
• Free cash flow for the fiscal years and for the six-month periods is derived as operating cash flow less purchases of property and equipment - the same definition Fortinet states in its earnings release. The three-month free cash flow figures are printed in the release itself.
• Stock-based compensation in the cash flow block is the amount shown in the statements of cash flows ($151.8 million for the six months ended June 30, 2026). Fortinet's stock-based compensation note reports $154.0 million of expense recognized in the statements of income for the same six months; the two figures are presented on different bases in the filing.
• Revenue by geographic region is based on the billing address of Fortinet's customers, as the segment notes in both filings state.
• Fortinet's 5-for-1 stock split took effect in June 2022, before every period in this record, so all per-share amounts here sit on the same post-split basis and no split adjustment was applied. Fortinet reports in U.S. dollars and is not an ADR issuer, so no currency translation or per-ADS conversion was needed.
• The FY2025 10-K states that amounts previously reported as marketable equity securities are now included in short-term investments, that amounts previously reported as gain on bargain purchase are now included in other income (expense) - net, and that amounts previously reported as loss from equity method investments and gain on bargain purchase are now included in "Other" within operating cash flows, in each case to conform prior periods to the current presentation. The 10-K states the reclassification had no impact on previously reported total assets, net income or cash flows from operating or investing activities and did not restate prior periods, so the 2024 and 2023 columns are reported here as the 10-K prints them.

Uncertainties

• Fiscal 2023 has no balance sheet in this record because the FY2025 10-K's balance sheets present only December 31, 2025 and December 31, 2024. Fiscal 2023's year-end cash balance is available because the statements of cash flows carry it.
• The quarter ended June 30, 2025 has no balance sheet in this record because the Q2 2026 10-Q's balance sheets present only June 30, 2026 and December 31, 2025.
• Every three-month cash flow figure in this record comes from the second-quarter 2026 earnings release exhibit rather than from a 10-Q, because the 10-Q presents cash flows only on a six-month basis. Press-release figures are furnished rather than filed, and can in principle be revised in a later report.
• The first quarter of fiscal 2026 is not presented on the face of either filing used here and is not included in this record.
• The trailing-twelve-month figures are arithmetic combinations of published periods, not amounts Fortinet reports.

Company details

Fiscal period

Source filings