Fortinet Raises Outlook as Revenue Growth Accelerates
Billings climbed 33% to $2.372 billion, extending a four-quarter acceleration.
Cybersecurity company Fortinet Inc. (FTNT) reported that second-quarter revenue rose 26% to $2.048 billion, accelerating from 20% growth in the first quarter and 15% in the fourth quarter of 2024.
The quarter marked a shift toward faster-growing product sales and exceeded each of Fortinet's principal forecasts. Revenue finished $117.9 million above the previous guidance ceiling, while billings beat the high end by $182.1 million. Non-GAAP operating margin and earnings also topped their ceilings by 3 percentage points and $0.14 a share, respectively.
GAAP diluted earnings rose 44% to $0.82 a share, accelerating from 29% growth in the first quarter. Net income increased 38% to $606.3 million, while the diluted share count fell about 4%, helping earnings grow faster than profit.
Product revenue climbed 52% to $773 million after rising 41% in the first quarter, and increased about 20% sequentially. Service revenue grew about 14% to $1.275 billion, leaving products as the main source of the quarter's acceleration. Billings rose 33%, compared with 31% growth in the first quarter and 18% in the fourth quarter.
The faster growth came with wider profitability. GAAP operating margin expanded to 34% from 31% in the first quarter, while non-GAAP operating margin increased to 38% from 36%. Free cash flow more than tripled to $965.6 million, lifting free-cash-flow margin to 47.2%, though cash generation eased slightly from first-quarter records.
Fortinet raised its 2025 revenue outlook to $8.02 billion to $8.18 billion from $7.71 billion to $7.87 billion, increasing both ends by $310 million. The company now expects 19% revenue growth, compared with its previous 15% target, and lifted the midpoint of its billings forecast by $500 million.
Full-year non-GAAP earnings guidance increased to $3.41 to $3.47 a share from $3.10 to $3.16, while the non-GAAP operating-margin outlook rose to 35% to 37%. Fortinet also raised its service-revenue forecast but reiterated its 79% to 81% gross-margin range, leaving its higher outlook dependent on sustaining growth alongside the improved margin profile.