Fortinet (NASDAQ: FTNT) raises revenue guidance and product sales jump 37%

Posted by Joseph Casey on Oct 31st, 2026

What happened

Fortinet, Inc. (NASDAQ: FTNT) grew third-quarter revenue 20% year over year to $2.08 billion and raised its 2026 revenue guidance. The quarter ended Sept. 30. The company reported results on Oct. 28.

Fortinet now expects full-year revenue of $8.13 billion to $8.21 billion and service revenue of $5.15 billion to $5.17 billion. Founder, Chairman and CEO Ken Xie said the results reflect "strong execution and broad-based demand across our entire portfolio." He said Fortinet raised its 2026 billings guidance for the third time this year.

The company also increased its share repurchase authorization by $1.2 billion, leaving $2 billion remaining. Its release also names a new FortiGuard Inline AI Security Service for FortiGate customers and a FortiLink SASE service.

Key numbers

Metric	Latest	Change	Source
Third-quarter revenue	$2.08 billion	from $1.72 billion, +20.5%	Calculated from SEC 8-K
Third-quarter product revenue	$765 million	from $559.3 million, +37%	SEC 8-K, Exhibit 99.1
Third-quarter billings	$2.34 billion	from $1.81 billion, +29%	SEC 8-K, Exhibit 99.1
GAAP operating margin	33.9%	from 31.7%, +2.2 percentage points	SEC 8-K, Exhibit 99.1
Third-quarter free cash flow	$865 million	from $567.5 million, +52.4%	Calculated from SEC 8-K
2026 revenue guidance	$8.13 billion to $8.21 billion		SEC 8-K, Exhibit 99.1

Read more: Fortinet (FTNT) company research

Where the growth came from

Product sales drove the growth. Product revenue grew 37% to $765 million from $559.3 million a year earlier. Service revenue rose to $1.31 billion from $1.17 billion, which OptimistFi calculates as 12.7% growth, well behind product.

Unrounded, OptimistFi calculates that total revenue rose $353.5 million, or 20.5%, from $1.72 billion in the third quarter of 2025.

Billings, which add the change in deferred revenue to revenue, grew 29% to $2.34 billion from $1.81 billion. Deferred revenue rose $258.7 million in the quarter, against $82.8 million in the third quarter of 2025.

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Margins, earnings and cash

Operating profit grew faster than sales, but gross margin slipped. GAAP operating margin rose to 33.9% from 31.7%. Non-GAAP operating margin rose to 38.2% from 36.9%. Total operating expenses rose 10.7% to $936.6 million, slower than revenue.

GAAP gross margin fell to 79.0% from 80.8%. Non-GAAP gross margin fell to 79.6% from 81.6%. Inventory stood at $591.2 million on Sept. 30, up from $399.5 million at Dec. 31, 2025.

GAAP diluted earnings per share were $0.86 against $0.62 a year earlier. Non-GAAP were $0.91 against $0.74. Net income was $635.5 million versus $473.9 million. Diluted weighted-average shares fell to 742.6 million from 761.2 million.

Operating cash flow reached $946 million versus $655.2 million. Free cash flow was $865 million, a 41.6% margin against 32.9%, and excludes escrow settlement proceeds. Cash and equivalents stood at $3.75 billion on Sept. 30, up from $2.50 billion at Dec. 31, 2025. Over nine months, deferred revenue added $817.8 million to operating cash flow of $3.07 billion, compared with $288.1 million a year earlier.

Why it matters

OptimistFi has argued that Fortinet works if its FortiGate/FortiOS platform stays the cost-effective way to combine networking and security while keeping software-like margins and cash conversion. The quarter strengthens that view on growth and cash, though gross margin moved the wrong way. Xie's claim of a "significantly lower total cost of ownership" is the company's own statement.

The headline profit gains need care. Non-GAAP EPS exceeds GAAP EPS by $0.05, down from $0.12 a year earlier. Non-GAAP figures exclude stock-based compensation of $82.0 million and amortization of acquired intangibles of $8.9 million. GAAP results include a $17.0 million gain from an escrow settlement tied to a prior business combination, which the non-GAAP figures remove. Part of the cash flow also reflects customers paying ahead of revenue recognition.

What's next

Fortinet hosts a conference call on Oct. 28 at 1:30 p.m. Pacific Time (4:30 p.m. Eastern) to discuss the results. Management then plans to present at the BMO Technology and Innovation Leaders Conference on Nov. 12, the UBS Global Technology and AI Conference on Dec. 2 and the Barclays Global Technology Conference on Dec. 9. The company says the schedule may change.

Fourth-quarter guidance is the next test. Fortinet expects revenue of $2.15 billion to $2.25 billion, billings of $2.77 billion to $2.92 billion and non-GAAP diluted EPS of $0.93 to $0.95. Its non-GAAP operating margin range of 35.5% to 37.5% sits below the third-quarter level. A gross margin inside the guided 78.0% to 80.0% range would hold the margin argument. A result below that range would weaken it.