Fortinet lifts full-year outlook after strong third quarter

Fortinet reported third-quarter revenue of USD $2.08 billion, up 20% from a year earlier, and raised its full-year 2026 revenue guidance.

Product revenue rose 37% to USD $765 million, while billings increased 29% to USD $2.34 billion. GAAP operating margin was 34% and non-GAAP operating margin was 38%. GAAP earnings per share were $0.86, and non-GAAP earnings per share were $0.91.

Cash generation remained strong. Operating cash flow reached USD $946 million and free cash flow totalled USD $865 million.

Fortinet also increased its share repurchase authorisation by USD $1.2 billion, leaving USD $2 billion remaining under the programme.

For the fourth quarter, Fortinet expects revenue of USD $2.155 billion to USD $2.245 billion. It forecast billings of USD $2.775 billion to USD $2.925 billion and non-GAAP diluted net income per share of $0.93 to $0.95.

For the full year, Fortinet now expects revenue of USD $8.125 billion to USD $8.215 billion, implying annual growth of about 20%. It projects billings of USD $9.568 billion to USD $9.718 billion.

Portfolio updates

During the period, Fortinet announced several product and partnership moves tied to artificial intelligence and distributed network security. These included the launch of its FortiGuard Inline AI Security Service and FortiLink SASE service.

Fortinet was also selected by Nvidia as an OpenShell Reference Architecture Partner to Secure AI. Separately, it announced a collaboration with Oracle on AI adoption, while Microsoft selected it to join the Sovereign Partner Ecosystem.

It was also recognised as a Leader in the 2026 Gartner Magic Quadrant for Hybrid Mesh Firewall and ranked highest for Ability to Execute for a second consecutive year.

Founder, Chairman and Chief Executive Officer Ken Xie linked the quarter's results to demand across the business and the company's position in AI-related security.

"We are very pleased with our excellent third quarter results, which reflect strong execution and broad-based demand across our entire portfolio, allowing us to raise our 2026 billings guidance for the third time this year," Xie said.

He also pointed to the role of network security as artificial intelligence adoption expands.

"Our strong momentum is driven by our continued leadership in the AI era. As AI introduces entirely new attack surfaces, Network Security remains the critical foundation of AI Security. Powered by our single FortiOS operating system and proprietary FortiASIC technology, our unified platform approach secures critical AI infrastructure while delivering industry-leading performance and a significantly lower total cost of ownership," Xie said.

Margins and growth

The quarterly figures suggest Fortinet continued to expand both its hardware and subscription-related business lines, with product revenue growing faster than overall revenue. Billings growth outpaced recognised revenue, indicating continued contract momentum as revenue is booked over time.

Its guidance points to continued expansion into the final quarter of the year. At the midpoint of the range, fourth-quarter revenue would be about USD $2.2 billion, while the full-year outlook signals a stronger finish than previously anticipated.

Margins also remained high by software industry standards. A GAAP operating margin of 34% and non-GAAP operating margin of 38% show the company converted a sizeable share of sales into operating profit during the quarter.

Fortinet's cash flow figures reinforce that trend. With USD $946 million in operating cash flow and USD $865 million in free cash flow, the company retained significant financial flexibility alongside its expanded buyback authorisation.

The increased share repurchase authorisation follows a quarter in which Fortinet combined double-digit revenue growth with strong profitability. The remaining USD $2 billion authorisation gives the company room to continue returning capital while funding operations and product development.

Attention will now turn to whether Fortinet can deliver on its fourth-quarter ranges for revenue, billings and earnings per share while maintaining the margin profile reported in the latest quarter.

For fiscal year 2026, Fortinet expects non-GAAP diluted net income per share of $3.54 to $3.58, based on a diluted share count of 741 million to 743 million.