Key Highlights

  • Non-GAAP EPS of USD 0.91 rose 23% from USD 0.74 and topped the USD 0.86 consensus estimate.
  • Revenue of USD 2.08 billion grew 20%, led by product revenue of USD 765.0 million, which climbed 37%.
  • Billings increased 29% to USD 2.34 billion, and free cash flow of USD 865 million grew 52%.
  • Full-year revenue guidance rose to USD 8.125 billion to USD 8.215 billion, and buyback authorization remaining is USD 2 billion.

Fortinet, Inc. (NASDAQ:FTNT) reported third-quarter 2026 non-GAAP diluted earnings per share of USD 0.91, up from USD 0.74 a year earlier and above a consensus estimate of USD 0.86. GAAP diluted earnings per share were USD 0.86, compared with USD 0.62 in the prior-year period. Total revenue of USD 2.08 billion was above a consensus estimate of USD 2.06 billion and grew 20% from USD 1.72 billion.

Product revenue rose 37% to USD 765.0 million, helped by customers moving to higher-performing firewall models that lifted average selling prices. Service revenue grew 13% to USD 1.31 billion. Founder and CEO Ken Xie said demand was broad across the portfolio and tied the quarter to network security upgrades for AI workloads, adding that the company raised its billings guidance for the third time this year.

Margins, Billings and Cash Generation

Non-GAAP operating margin was 38.2%, a third-quarter record and up 130 basis points, while GAAP operating margin was 33.9%. Non-GAAP gross margin was 79.6% and GAAP gross margin was 79%. GAAP net income rose to USD 635.5 million from USD 473.9 million.

Total billings of USD 2.34 billion grew 29%. Management said the value of deals above USD 1 million rose 51%, SASE firewall billings grew 31%, operational technology billings grew nearly 40% and service billings grew 26%. Short-term deferred revenue growth of 14.5% was the highest in five quarters. Operating cash flow was USD 946 million, and cash and short-term investments totaled about USD 4.8 billion at quarter end. The board raised the repurchase authorization by about USD 1.2 billion, leaving USD 2 billion available.

Guidance and Supply Considerations

For the fourth quarter, the company guided to revenue of USD 2.155 billion to USD 2.245 billion, billings of USD 2.775 billion to USD 2.925 billion, and non-GAAP earnings per share of USD 0.93 to USD 0.95. Non-GAAP operating margin is guided to 35.5% to 37.5%.

For 2026, revenue is guided to USD 8.125 billion to USD 8.215 billion and billings to USD 9.568 billion to USD 9.718 billion. Non-GAAP earnings per share are guided to USD 3.54 to USD 3.58. Compared with the initial February outlook, the billings and revenue ranges are higher by USD 1.14 billion and USD 570 million. The company's chief financial officer noted that lead times for certain components lengthened during the quarter, even as product demand remained strong throughout it. Management also said service revenue growth bottomed in the first quarter of 2026, and it projects faster service growth in 2027.

Developments to Follow

Four items stand out for the coming reports. The first is the guided fourth-quarter revenue range of USD 2.155 billion to USD 2.245 billion, which the company said implies growth of about 15% at the midpoint. The second is service revenue, guided to USD 5.15 billion to USD 5.17 billion for 2026, against short-term deferred revenue growth of 14.5%. The third is component lead times, which management flagged this quarter. The fourth is capital return, with USD 2 billion of authorization remaining. Conference appearances are scheduled for November 12, December 2 and December 9.