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Fortinet (FTNT)
NASDAQ:FTNT

Fortinet (FTNT) AI Stock Analysis

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FT

Fortinet

(NASDAQ:FTNT)

80Outperform
Fortinet's strong financial performance and positive earnings guidance are major strengths, supported by robust profitability and operational efficiency. However, concerns about macroeconomic challenges and a high P/E ratio slightly dampen the overall outlook. The stock demonstrates moderate technical strength, but valuation concerns and external risks should be monitored.
Positive Factors
Customer Base
FTNT has approximately 77% of the Fortune 100 companies and 71% of the Global 2000 companies as customers.
Financial Performance
Record 1Q operating margin of 34.2% bested Street's 30.6% estimate and EPS of $0.58 exceeded Street's.
Product Development
FTNT continues to benefit from a refresh cycle as well as a shift to hybrid platforms as profitability.
Negative Factors
Guidance and Expectations
Revenue guidance for the second quarter was below consensus despite mounting expectations for Fortinet’s firewall refresh cycle to materialize.
Market Confidence
The stock is trading lower after hours as investor confidence over the timing and magnitude of the refresh cycle is likely shaken.
Revenue Dependency
One distributor accounted for 27% of FTNT's total revenue in Q1, indicating a potential risk due to high dependency on a single distributor.

Fortinet (FTNT) vs. S&P 500 (SPY)

Fortinet Business Overview & Revenue Model

Company DescriptionFortinet, Inc. provides broad, integrated, and automated cybersecurity solutions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It offers FortiGate hardware and software licenses that provide various security and networking functions, including firewall, intrusion prevention, anti-malware, virtual private network, application control, web filtering, anti-spam, and wide area network acceleration. The company also provides FortiSwitch product family that offers secure switching solutions for connecting customers their end devices; FortiAP product family, which provides secure wireless networking solutions; FortiExtender, a hardware appliance; FortiAnalyzer product family, which offers centralized network logging, analyzing, and reporting solutions; and FortiManager product family that provides central and scalable management solution for its FortiGate products. It offers FortiWeb product family provides web application firewall solutions; FortiMail product family that secure email gateway solutions; FortiSandbox technology that delivers proactive detection and mitigation services; FortiClient that provides endpoint protection with pattern-based anti-malware, behavior-based exploit protection, web-filtering, and an application firewall; FortiToken and FortiAuthenticator product families for multi-factor authentication to safeguard systems, assets, and data; and FortiEDR/XDR, an endpoint protection solution that provides both comprehensive machine-learning anti-malware execution and real-time post-infection protection. It provides security subscription, technical support, professional, and training services. It sells its security solutions to channel partners and directly to various customers in telecommunications, technology, government, financial services, education, retail, manufacturing, and healthcare industries. It has strategic alliance with Linksys. Fortinet, Inc. was incorporated in 2000 and is headquartered in Sunnyvale, California.
How the Company Makes MoneyFortinet generates revenue primarily through the sale of its cybersecurity hardware products, software licenses, and subscription services. The company offers a range of security appliances, such as firewalls and intrusion prevention systems, that form the backbone of its hardware sales. In addition to hardware, Fortinet earns substantial income from its software solutions and security subscriptions, which provide ongoing protection and threat intelligence updates. The subscription model ensures a steady stream of recurring revenue. Additionally, Fortinet offers professional services, including consulting, training, and support, which contribute to its revenue. The company's strategic partnerships with major technology vendors and service providers enhance its market reach and facilitate integrated security solutions, further bolstering its financial performance.

Fortinet Key Performance Indicators (KPIs)

Any
Any
Billings
Billings
Reflects the total value of products and services invoiced to customers, indicating sales momentum and future revenue recognition.
Chart InsightsFortinet's billings have shown a steady upward trend, with notable growth in Q4 2024. Despite macroeconomic uncertainties and potential tariff impacts, the company remains resilient, driven by strong innovation and customer acquisition efforts. The latest earnings call highlights robust growth in Unified SASE and AI-driven secure operations, which are key contributors to billings. Fortinet's guidance for 2025 suggests continued momentum, with expected billings growth and strategic infrastructure investments, reinforcing its market leadership and commitment to achieving the rule of 45 for the sixth consecutive year.
Data provided by:Main Street Data

Fortinet Financial Statement Overview

Summary
Fortinet exhibits a strong financial position with high gross and net profit margins. Revenue growth is robust, and operational efficiency is reflected in solid EBIT and EBITDA margins. Cash flow generation is efficient, though the balance sheet has improved from past challenges with negative equity.
Income Statement
92
Very Positive
Fortinet demonstrates strong financial performance with high gross profit margins at 80.57% and significant net profit margins at 29.30% for TTM. Revenue growth rate of 12.27% from the previous year is robust, contributing to overall profitability. EBIT and EBITDA margins are also strong at 30.24% and 34.40% respectively, indicating efficient operational management.
Balance Sheet
75
Positive
The balance sheet shows a high debt-to-equity ratio due to negative equity in previous years, though it has improved to a positive equity of $1.49 billion recently. Return on Equity (ROE) is not calculable due to negative equity in earlier periods, but positive current equity suggests improved financial health. The equity ratio is 15.30%, indicating limited equity financing relative to assets.
Cash Flow
88
Very Positive
Fortinet's cash flow is strong, with a free cash flow growth rate of 8.54% and a high operating cash flow to net income ratio of 1.29 for TTM, indicating solid cash generation. The free cash flow to net income ratio is 1.08, showing an efficient translation of net income into free cash flow.
Breakdown
Dec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
5.96B5.30B4.42B3.34B2.59B
Gross Profit
4.80B4.07B3.33B2.56B2.02B
EBIT
1.80B1.24B969.60M650.40M531.80M
EBITDA
1.80B1.47B1.08B727.70M560.40M
Net Income Common Stockholders
1.75B1.15B857.30M606.80M488.50M
Balance SheetCash, Cash Equivalents and Short-Term Investments
4.07B2.44B2.21B2.55B1.84B
Total Assets
9.76B7.26B6.23B5.92B4.04B
Total Debt
994.30M1.07B990.40M988.40M53.10M
Net Debt
-1.88B-326.50M-692.50M-330.70M-1.01B
Total Liabilities
8.27B7.72B6.51B5.12B3.19B
Stockholders Equity
1.49B-463.40M-281.60M781.70M856.00M
Cash FlowFree Cash Flow
1.88B1.73B1.45B1.20B957.80M
Operating Cash Flow
2.26B1.94B1.73B1.50B1.08B
Investing Cash Flow
-727.40M-649.30M763.90M-1.33B-72.80M
Financing Cash Flow
-50.10M-1.57B-2.13B82.80M-1.17B

Fortinet Technical Analysis

Technical Analysis Sentiment
Positive
Last Price104.59
Price Trends
50DMA
98.75
Positive
100DMA
100.27
Positive
200DMA
90.89
Positive
Market Momentum
MACD
1.34
Positive
RSI
55.26
Neutral
STOCH
64.76
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FTNT, the sentiment is Positive. The current price of 104.59 is above the 20-day moving average (MA) of 102.14, above the 50-day MA of 98.75, and above the 200-day MA of 90.89, indicating a bullish trend. The MACD of 1.34 indicates Positive momentum. The RSI at 55.26 is Neutral, neither overbought nor oversold. The STOCH value of 64.76 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FTNT.

Fortinet Risk Analysis

Fortinet disclosed 59 risk factors in its most recent earnings report. Fortinet reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Fortinet Peers Comparison

Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
82
Outperform
$23.70B28.8830.92%6.40%6.49%
80
Outperform
$80.05B43.05205.91%13.83%58.13%
76
Outperform
$109.41B721.64-0.69%29.39%-119.62%
74
Outperform
$127.77B109.0223.38%13.86%-46.44%
ZSZS
74
Outperform
$38.91B-1.21%27.77%89.39%
72
Outperform
$17.56B1,777.39-5.36%35.12%-191.84%
60
Neutral
$11.59B10.39-7.23%2.94%7.46%-10.76%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
FTNT
Fortinet
104.59
42.25
67.77%
CHKP
Check Point
218.68
66.82
44.00%
PANW
Palo Alto Networks
192.98
31.10
19.21%
CYBR
CyberArk Software
355.00
105.30
42.17%
ZS
Zscaler
251.50
70.90
39.26%
CRWD
CrowdStrike Holdings
439.26
90.51
25.95%

Fortinet Earnings Call Summary

Earnings Call Date:May 07, 2025
(Q1-2025)
|
% Change Since: -2.00%|
Next Earnings Date:Aug 06, 2025
Earnings Call Sentiment Neutral
Fortinet reported strong growth and maintained leadership in key market segments. However, macroeconomic uncertainties and potential tariff impacts present challenges. Despite these concerns, the company's innovation and customer acquisition efforts remain strong.
Q1-2025 Updates
Positive Updates
Strong Revenue and Growth
Fortinet reported a revenue growth of 14% and a record first quarter operating margin of 34%. Free cash flow was also a record at $783 million, representing a margin of 51%.
Unified SASE and Secure Operations Growth
Unified SASE billings grew by 18% and account for 25% of the business, while AI-driven secure operations billings increased by 29%, accounting for 10% of the business.
Market Leadership in Multiple Segments
Fortinet maintained its position as the number one deployed firewall vendor worldwide and a leader in SD-WAN and OT security.
New Customer Acquisition
The company saw a 14% increase in new logos, with over 6,300 new customers, driven by channel partner investments.
Innovative Product Launch
Fortinet announced the FortiGate 700G series, a high-performance firewall for mid-size businesses and distributed enterprises.
Negative Updates
Macroeconomic Uncertainty
The company noted hesitancy in sales due to broader economic outlook and geopolitical uncertainties, which could impact top-line results.
Tariff Concerns
Potential future U.S. tariffs could impact hardware sales to U.S. customers, although no immediate effect is expected.
Sequential Decline in Service Revenue
Service revenue saw a slight sequential decline attributed to fewer days in the first fiscal quarter.
FX Headwinds
The weakening U.S. dollar is expected to create an operating margin headwind of approximately 120 basis points in Q2.
Company Guidance
During the call, Fortinet provided guidance for the second quarter and full year of 2025. For the second quarter, the company expects billings between $1.685 billion and $1.765 billion, with a midpoint growth of 12%, and revenue between $1.59 billion and $1.65 billion, reflecting a midpoint growth of 13%. Non-GAAP gross margins are projected to be between 80% and 81%, with non-GAAP operating margins ranging from 31.5% to 32.5%. Earnings per share are anticipated to be between $0.58 and $0.60. For the full year, Fortinet expects billings to range from $7.2 billion to $7.4 billion, with revenue between $6.65 billion and $6.85 billion. The full-year guidance includes non-GAAP gross margins of 79% to 81% and non-GAAP operating margins of 31.5% to 33.5%. The company projects earnings per share to be between $2.43 and $2.49. Additionally, Fortinet plans infrastructure investments between $380 million and $430 million for the year, maintaining a non-GAAP tax rate of 18%. Despite challenges, Fortinet remains optimistic about achieving the rule of 45 for the sixth consecutive year.

Fortinet Corporate Events

Executive/Board ChangesBusiness Operations and StrategyFinancial Disclosures
Fortinet Announces CFO Retirement and Successor
Positive
Feb 6, 2025

Fortinet announced the upcoming retirement of its CFO, Keith Jensen, effective May 15, 2025, with plans to appoint Christiane Ohlgart as his successor. The company reported strong financial results for the fourth quarter and full year of 2024, with significant revenue growth and record operating margins, highlighting its strategic investments and leadership position in the cybersecurity industry.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.